Summary
We are lowering our intermediate-term technical assessment to neutral. As we said on Tuesday, the technical evidence is mounting that something big (at least 10%) is brewing. But as an astute chart-reader once said, “Tops are a process, bottoms are an event.” Frustratingly, tops are difficult to call until price breaks key chart support and important moving averages. Building a cash reserve seems to be more prudent with each passing day. The market will tell us that we are early/wrong if the major indices break strongly to all-time highs with follow-through, volume, and some breadth thrusts. That will be our signal to get back aboard the bull train. We have seen five-day/13-day and eight-day/21-day exponential moving average (EMA) crossover sell signals on the major indices. The S&P 500 (SPX) has been below its 50-day average for four days, and that average has bearishly acted as resistance on an intraday basis for a couple of those days. The 21-day rate-of-change (ROC) has turned negative, which can be a sign that additional losses are likely. The daily Vortex Indicator, the daily moving-average convergence/divergence (MACD) indicator, and the 14-day relative strength index (RSI) also have all turned bearish. The SPX broke its 20-day price channel, its weekly mi
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