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Medium Term Sell Signal In Place

The market broke 3 important supports within the last 2 sessions:

- the red uptrend
- the green line
- the first horizontal blue line

The market tested (intraday) late September's low but managed to close above it. If the market can't remain above this key level in coming days, the next strong support is around the second horizontal blue line. This represents roughly 3% more downside until the next strong support.

Sigma Whole Market Index

The Sigma Trend Index declined from '-19' to '-34'. The Trend Level (TL) is at '1' (short term oversold). This situation can remain in place for several days (the TL remained at '5' for 8 consecutive sessions in September) but if/when we get an impulse move to the upside (PL and/or Swing at '5'), we will close our short term short positions.

The Power Level (PL) is at '2', telling us we are in presence of an impulse move to the downside.

Sigma Table

Looking at our Medium Term Momentum Index, we can notice that after Monday's sell signal (blue line crossing down the red one), the blue line is sliding very fast.

It is also important to notice that this index gives few signals (roughly one per quarter on average).

Sigma Momentum


Conclusion:

The market is oversold on a short term basis but this oversold situation can further deteriorates in coming days if we break the next key support.

If we get an impulse move to the upside, a nice tradable rebound should materialize.

Nevertheless, on medium term basis, our Medium Term Momentum Index gave us a major warning 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.

Short term position:
- short 1 CAC at 3432.6 (take profit 3290, stop loss 3432)

Medium term positions:
- short 3 SPX at 1376.22
- short 1 NDX at 2578.46
- short 1.5 CAC at 3103.87

 

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