The sp500 Futures are down significantly this morning. It is looking like we will get a close under 1120 today, or at the very least some type of weak close. I have to switch to BOT short signal right now as of the open today. Momentum appears to have shifted from up to down and there there is growing evidence of a trend change.
The recent advance was also a 61.8% retracement of the decline that began in April 2010. The NYSE summation index is starting to roll over and the banking indices look weak. The VIX shows a large falling wedge formation. It is the nature of that pattern to show sharp moves once the pattern completes.
Going long the FAZ appears to make the most sense right now as financials are particularly weak in recent weeks.
I suspect that there will be some type of big news event in October that possibly changes the perspective and outlook dramatically. To date we have not really had a game changing news event that firmly tips the scale in the up or down direction. I am speculating that one may come in the next few weeks, or by October some time.
I think it is fair to say that since the April 2010 top we have not seen a true capitulation in terms of price. We have had excessive bearishness readings but not a total capitulation in terms of price. Whether we get that in coming weeks remains to be seen, but for now I think the short side is the place to be.