Soggy action in equities today won't rule out gamesmanship before opex Friday

The Nasdaq McClellan Oscillator today got down to that lower, shallower trendline I was talking about in a post here yesterday. Given that today's action went according to the ChartsEdge daily map, except that the expected end-of-day push up proved to be a rollover fizzle instead ... and that the ChartsEdge weekly cycle forecast seems to be pushed aside by the negative bias - it doesn't seem that the markets can push upward now, does it? But let's consider a few factors. One, we did get the slightly lower low today, even though it was in the afternoon; and in many indices, it still looks like a test of the 20-day moving average. The lower low can have finished off a small 5th wave of a first wave and pave the way for a moderate second-wave pullback up. Another factor is that the TRIN (short-term trading ARMS index) popped up yesterday to really oversold levels, and then moderated today - that can signal an oversold bounce may materialize. There's still time for that kind of gamesmanship before cycles pull down again Thursday/Friday. Now, there's guarantee there can be a tradable push up tomorrow/Thursday, given how soggy the market was today, but I still would not rule it out for fun and games with a test upwards that rolls over again into lower levels on Friday.

How's it looking overall for swing traders? The bearish signs are increasing (including that the VIX did move higher today) although many are still interpreting this as signaling that rally leg is over but to look for a pullback down into the right shoulder of a bullish reverse head and shoulders pattern. So however this plays out into Friday, you can expect increasing discussion of where the next buy point will be. We'll be addressing not only that, but whether or not that buy point will be at new lows, after some time goes by on the move down. Meantime, look at other parts of the Nasdaq McClellan chart (courtesy of DecisionPoint.com), below. While the Oscillator might get a bounce from that shallower lower trendline I've marked again, the fact that it is under the zero line is bearish, along with the increasing negative divergence it's showing. And now also the index ratio (bottom indicator) is under its zero line.

So just in case you were wondering whether the rally really IS over - you don't have to wonder too much anymore. In fact, if you are wondering that while remaining long the equities markets, you would welcome a chance to sell into a push higher the next day or so, as far as I can tell! The markets are giving many signs of rolling over and there are plenty of very good reasons to take profits and wait and see (or sell short) as the market decides how low it wants to go.

Some will still be thinking about the Bradley model with its indicated turn date mid-July. Just remember, that doesn't have to be a higher high.