New lows likely…

If you’ve been following my market commentaries, you’ll have either gained rather well from being short, or at the very least you’ll have avoided the carnage.

This was a momentous week for the markets, and yet you won’t find me looking for reasons (say, like the Fed) for what’s going on. My analysis is almost exclusively shaped by the way we interpret market structure, using our proprietary tools.

Spend time with me, and you’ll be able to do exactly the same!

So, now the S&P 500 has broken down through 3768 (374 for the SPY), the odds of violating the June lows have increased dramatically.

Such a steep drop in the last two weeks means the markets are now oversold and likely to stall for a while. Shorts covered during the last hour of Friday’s trading and the main indices (apart from the Dow) avoided their lowest closes since June as a result.

Market Outlook

Last week I said we should drop to very near that 374 SPY level… Thursday closed literally right there, and Friday gapped down through it.

This coming week I expect a slowdown in the fall, and even a pause or retracement.

In time, this will all lead to spectacular setups, so stay in the game.

The Main Indices

Last week I mentioned we were likely to also pause for a few days. That lasted just two days!

This week, we’re even more oversold, and the likelihood of a pause or retracement to catch breath is high.

Market Timers

  • Longer Term Market Timer (OVIsi): Red, and likely to stay red for this coming week.
  • Medium Term Swing Timer: Negative (oversold) 
  • SPY OVI: Maximum negative

The interpretation of this is that we’re even more likely to pause for breath in the next few days than we were this time last week. However, as per last week, the medium term outlook is still bearish.

Fast Filters Stock Selection

Some spectacular bearish moves from my shortlist last week despite the challenges. This week is even more challenging, and I’m going to abstain from providing a shortlist this time around!

Video analysis

You can check out my full weekly review by clicking the video below…

Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.

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