More Downside For US Equities

SPY scenario playing out so far. Looking for a reversal off the 211.77 former support, now resistance & a resumption of the selling. So far, so good on IWM as well. A gap down to trap longs & deny an optimal entry for late-comer shorts, followed by the expected first reaction & if things continue to play out as expected, IWM should turn down so, taking out this morning's lows. Previous & updated 5 minute charts:

Jun 9, 2016 10:01am|Categories: Equity Market Analysis|Tags: , , , |8 Comments


  1. david k June 9, 2016 10:10 am at 10:10 am

    Randy, are the targets you listed on the 5 minute charts areas you recommend taking profits if short IWM and SPY or are you expecting get more downside thereafter as opposed to a bounce back to possibly new highs?


    • rsotc June 9, 2016 11:12 am at 11:12 am

      The 5-minute charts list target for short-term trades (hours to days) but we also now have confirmed divergence on the 60-minute time frames so unless the bulls can step in here & ramp the market above yesterday’s highs (and maybe then some), it would appear that we’re likely to see a multi-week correction, maybe down to the 204 level on SPY & possibly lower. I’ll just have to watch the price action today & tomorrow to see if the markets act like they should following these breakdowns as they’ve been able to foil quite a few bearish chart patterns & breakdowns lately, hence the reason these are only unofficial trade ideas (as my confidence isn’t high enough to make the index ETFs official short trades right now).


  2. lee1 June 9, 2016 10:16 am at 10:16 am

    Do you think we could possibly see 2060 or even lower in the next 3 weeks or not possible to project today? I am guessing run up to Brexit may spook the market a bit.


    • rsotc June 9, 2016 11:15 am at 11:15 am

      Lee, as of now, my max. downside target on the $SPX (before any meaningful & lasting rally) would be 2090-2085. That could change in the comings days/weeks, depending how things develop. On the flip side, if the bulls can ramp the market higher & foil those 60-minute divergences, then I think you’ll see that new high in the $SPX that you’ve been calling for. Again, I favor the bearish case but the next few trading sessions should be very telling.


  3. lee1 June 9, 2016 1:23 pm at 1:23 pm

    Dip buyers come in every time it starts to look like a selloff may be commencing. Wondering if 2090 is even doable here.


  4. david k June 9, 2016 3:48 pm at 3:48 pm

    Randy, not in front of computer. Curious if the macd cross you mentioned earlier on the 60 minute SPX chart flipped back with this ramp up in the market.


    • rsotc June 10, 2016 10:42 am at 10:42 am

      @david-k I’m sorry that I didn’t see your question earlier on whether the 60-minute MACD flipped back. No it didn’t but of course by now, that divergence is certainly confirmed with the MACD clearly headed down following the bearish crossover on Wednesday (and no, it never crossed back up yesterday).


  5. lee1 June 10, 2016 9:40 am at 9:40 am

    Good call. Falling hard. Let us know your thoughts once you see something.


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