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Weekend Update December 13

Late last week we finally followed through on the Bearish setup in markets, with ES SP500 futures dropping to under the key 2000 level, and now negative on the year in mid December.

Internals were strongly bearish, and at extremes Friday, technicals such as RSI and Stochastics are oversold on all timeframes out to 4 hrs on SPY, so while our expectations are for more down to come, there may be a corrective retrace coming first, especially into FOMC announcement on Wednesday the 16th. This is a key market event, and likely to be pivotal for the next phase of market movement.

Screenshot 2015-12-12 17.12.11

Breadth Dec 11

Bears have a head start at the moment, but due to the large intraday swings we’ve had for several months now, nothing is certain.

The Dollar Weighted buying pressure moved steadily downwards all day as seen here, money was flowing out of key market moving stocks.

Trend page Dec 11

Volatility was well up, with VIX close to the 25 zone, so there is some real concern here for a bigger down move by SPX options players.

Volatiltiy Dec 11 close

We’ll be watching for a bounce into FOMC meeting and then all bets are off.