Daily candles of major US indices signal that the bottom is likely behind and a rally is likely underway. However, my long-term buy signal has not triggered yet. Perhaps it can trigger tomorrow, but certain conditions should be met, and I would like to discuss some of them today.
The initial damage was done on the monthly and weekly frames. In order to show a recovery, at least the weekly candles should confirm the reversal. It could happen tomorrow.
If tomorrow the indices close above:
SPX – $4457, a weekly reversal confirmed;
NDX – $15069, a first step in the right direction;
DJIA – $35061, a first step in the right direction.
The wave structure off the lows looks corrective. I just cannot find a proper motive pattern that is supported by Fibs in all three indices.
Below are my operative counts for SPX. The red – possible leading diagonal – in this case it would retrace almost to the bottom. The purple – a flat that would resolve lower.
And the last one. I don’t know for how long all indices can run on hourly RSI over 85. Perhaps it is a great experiment for defying gravity.
Anyway, tomorrow would be a decision day. If the RSI somehow normalize and the weekly candles close above the defined levels, the rally would likely be confirmed. There is one more condition to trigger the buy signal, and I hope it would be met tomorrow either.
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