The daily tape on the sp500 is showing a small hanging man candlestick today which is so far unconfirmed. Assuming the hanging man (strange isn’t it how a hanging man candlestick forms during this intense political and news cluster?) retains shape by the close today then it would need to be confirmed with a closing under it, perhaps sometime this week.
Hanging man candlesticks are essentially hammer candles that form at peaks of trends. I should say though that hanging man candlesticks and candle patterns in general have not been too reliable on indices such as the sp500 on the daily time frame.
The other issue is the July 7 2011 swing high in the sp500. This swing high needs to remain as a high during the next couple of weeks to keep the monthly bearish scenario alive and also to help keep the head and shoulder top scenario alive.
If we see the sp500 blast higher above the July 7, 2011 swing high, then it is going to put quite a big fly in the so called ointment.
I am waiting for a daily MACD histogram sell signal which so far is non existent.
Daily MACD is still in bullish mode. Weekly MACD is in bearish mode but it is at a juncture where it could easily turn upwards for a bullish crossover. But it is also in a zone that can transform it into a ‘weekly bearish kiss scenario’.
The weekly bearish kiss scenario would confirm very well with my monthly bearish divergence scenario and help strong to confirm the monthly bearish scenario into October 2011.
But we cannot blast up above the July 7, 2011 swing high!
If we do then something is probably very wrong with the bear scenario.
We have 5 trading days left for July 2011. This means that the August 2011 candlestick is waiting on deck.
It will be very important to observe the transformation of the July 2011 candlestick to the August 2011 candlestick for bearish clues.I think they will arrive, but there are still some conditionals that keep me from saying flat out we are deep into the bear scenario.
P.S. I have reviewed a bunch of charts such as the SMH, XLF, the RTH and IYR etfs and they all seem to confirm the bearish case for now.