S&P 500 STRATEGY: SELL
The S&P 500 managed to eke out a gain this week, but not before putting in new lows for the most recent move down. Tuesday saw a huge up day, pumping up the bulls, but it was all for naught. We failed at the 200-day MA and then proceeded to fall once again. Last week we noted how we should fail in the range of 1,480 to 1,500; the high of the week was 1,492. The recent lows were around 1,440 and if that breaks again we are almost sure to test the August lows.
Indicators in many cases are oversold but we can remain oversold for some time. There is no sign here that we are making a low, so now is not the time to come in and buy dips. Strategy should be to sell rallies. Cycles are now pointed down into December. We expect to continue this downtrend until at least the second week of December before we might see the start of a possible year-end Santa Claus rally. We may or may not be at new lows by that time; new lows would not surprise us. Irrespective, we don’t believe it will last long but it could be dramatic.