Quick outlook - I continue bearish for coming hours/days

A few days ago, I began giving many reasons why I expected a decline in SPX and QQQQ, and today the markets moved lower. I expect further lower prices, unless the SPX can break out above resistance. I also expected the financials to get a bounce today and then weaken, which is exactly what happened, allowing me to get into FAZ at a great price near the day's low, selling it close the day's high for 8% profit (see post below).

I expect SPX to reach around 1060 if it can break 1078/72, which I expect it will. I will update the target more precisely later. I'm positioned for this via SDS as a swing trade (others might like SPXU which is 3x bearish, or SH which is 1x bearish).

Why is the outlook bearish?  Because:

The QQQQ have a bearish gravestone daily candle.

SPX has a bearish red candle with a topping tail.

There are bearish divergences all over the daily, 60min, and 15min charts (divergence between price and one or more of the following: rsi, stoch, macd, macd hist.  Divergence means the prices in SPX made new highs recently, but the other indicator (like rsi) made lower highs. So the slope of the prices is UP but the slope of the rsi, macd, stoch is down, creating the divergence.

The VIX made a big green candle at end of today.

I don't have charts to post now, maybe I'll add them later here.

Of course, the bulls can reverse this negative situation by first holding support (which I expect to be tested tomorrow) and then pivoting upward. Again, the stoch and rsi need to move higher, as mentioned in daily ramblings post below.  However, until they reverse it, the charts are bearish short term now.

Further, this does not mean that SPX will not make higher highs later. It simply means that for the coming hours/days, SPX is expected to decline.  Depending on the bull/bear reaction after that, SPX can continue downward, or reverse up for new highs.  We'll take a look at that if/when SPX gets to 1060.


* ChristopherStockGuy is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. For details, see the post from SATURDAY, AUGUST 15, 2009 titled "Disclaimer".