Summary
Trying to pick a top in stocks has been challenging. But in the S&P, between Tuesday’s tape ref close confirmation and yesterday’s TD 9, we now can confirm a reversal in trend on the S&P 500. Add in a confirmed low in EURUSD, and we have the technical backdrop for significant capital rotation. This suggests further underperformance of US stocks as investors shift toward foreign equities and precious metals.
S&P: TD 9 of 13 suggests a 1–4-day counter-trend rally before lower
Yesterday’s 9 is textbook DeMark stuff and confirms a reversal in trend down. But note, TD 9s are a glass-half-full, glass-half-empty story. Yes, it marks a reversal in trend (down). But, conversely, the DeMark playbook suggests a 1-4-day counter-trend rally before the next leg lowers, aka a dead cat bounce. Now, all eyes are on the 200-DMA at 5728—the next line in the sand. If it gives way, expect acceleration to the downside, targeting 5479.
EURUSD: Confirmed uptrend.
Bulls in control. At the end of last month, we highlighted a critical TD 13 sell signal on the US Dollar Index (DXY), “suggesting a significant downturn” (“MI2 TD Chart Point: Dollar Top and Equity Downside Round 2” 26th Feb). In EURUSD terms, we are now in an uptrend with a TD 10 of 13 and targets of 1.09 and 1.15
