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Loading the Gun

The market continues to evolve in line with our wave count. We are close to our target zone for this rebound, but we aren't there yet.

The 1380-1390 area remains our preferred target zone on the SPX.

Sigma Whole Market Index

Looking at the Sigma Trend Index (STI), this indicators continues to improve slightly, moving from '9' to '10'.

Other indicators remain in neutral territory at '3'.

Sigma table

But as on Wednesday, the clouds are coming from the Breadth Index: while the market reached new high today (blue line), this has not been confirmed by the Breadth Index (red line). This creates a negative divergence in the market. This is a warning signal that a top could be close to current levels.

Market Breadth

Conclusion:

We believe we are probably playing extra time in this counter trend rally, but we don't want to rush too early.

According to the wave count, it remains some upside. On top of that, we would like to see a reversal in stock price without a new top in our breadth index, this would be a confirmed negative divergence.

If/when it happens, we will turn both our medium and short term positions to the short side.

We will move neutral on our short positions prior to this signal.

For those of you interested in our intraday move, you can visit our site during the day: we post all our trades in real time. You can also subscribe to our twitter account (@SigmaTradingOsc), it is free and you are updated on our latest view/trades.

Current positions:

Medium term positions:
- short 2 SPX at 1336.99
- short 1 NDX at 2578.46

Short Term positions:
- long 1 SPX 1363.23
- 1/2 long CAC at 3208.07
- 1/2 long NDX at 2585.95

 

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