Comment
A couple of weeks ago, we flagged that with euphoria building and positions extended “these weren’t levels to add to risk” in US equities (MI2 Chart Point: Danger Will Robinson” 17th July). However, while we advocated “taking some profit, tighten stops, and consider downside hedges”, we didn’t advocate outright shorts. Fast forward, and as you will see below, while the patterns aren’t yet complete, the technical storm clouds are gathering and suggest markets might be on the cusp of a material move lower.
Yesterday was a great day for the bears, full stop. We got textbook key day reversals across the board — S&P, Nasdaq-100, EuroStoxx, and DAX — where markets opened above prior closes, made new highs, and then got slammed into red by the bell, closing below the previous day’s low. It wasn’t just window dressing either — it was the biggest volume day of the month on the Dow, S&P, and Nasdaq-100, signalling real participation. The Dow closed below its downside trigger and is now Bar 3 of 9 lower, with a gap-fill target at 43,430. The S&P opened at a new all-time high (you can’t make this up), only to reverse violently and engulf the past five sessions — bulls will try to defend the 20-day MA at 6,304, but a break targets 6,262 and then the June 24 gap-fill at 6,028. Nasdaq-100 followed the same playbook — key day reversal and a clean break of 23,272 with terrible internals from SMH and SOX; 20-day MA at 23,032 is the battleground, and if it gives way, the next stop is 22,669. Over in Europe, same story — EuroStoxx puked below its 50-day MA at 5,343 on rising volume with just 14 advancers vs. 36 decliners, and it’s only 2 of 13 on TD Sequential, meaning the momentum lower is just beginning; support sits at 5,213, then 4,924. The DAX printed its fifth failure at 24,400 in a month, this time with a proper key reversal on volume — bulls have one last stand at the 50-day MA (23,965), but a down close today opens the trap door to 23,385.
Summary
- SPX: Key reversal, highest July volume; below 6,304 targets 6,262, then 6,028.
- NDX: Broke 23,272; close below 23,032 opens path to 22,669.
- INDU: TD 3 of 9 down; gap-fill target at 43,430.
- SX5E: Closed below 50dma; eyes on 5,213, then 4,924.
- DAX: Rejected 24,400 again; 23,965 must hold or drops to 23,385.
SPX Bears Grab the Wheel …SPX has printed multiple TD Combo and Sequential 13 sell signals and followed with a bearish price flip, then closed below the TD Reference Close Up at 6389.77 — confirming downside risk. A lower open, lower low, and down close would seal the deal for further acceleration. Initial support sits at the TDST Level Down of 6267, followed by the TD Trend Factor at 6069, and the rising 20-day moving average at 5898. Until bulls reclaim 6389 with authority, bears are in control.
INDU: The Sloppiest Tape of the Trio…Dow (INDU) is the messiest of the majors — TD Sequential 11 of 13, Setup 3 of 9, and for the second straight session, a close below TD Reference Close Down at 44502.44 confirms the stall. This is a market that’s drifting without leadership and leaking below key levels. Eyes on 42901 for initial support, then the rising 200-day moving average at 42208, and TDST Level Down at 41981 as the final line before bulls lose control.
NDX: Combo Stack Cracks, Bears Take the Reins Nasdaq 100 (NDX) has printed back-to-back TD Sequential and Combo 13s, followed by a bearish price flip and a close below the TD Reference Close Down at 23272.25 — giving the bears the edge. Momentum is rolling, and MACD confirms waning trend strength. A lower open, lower low, and down close today locks in full downside confirmation. First support sits at the TDST Level Down at 22669, then TD Propulsion Down at 22169, with the 200-day moving average down at 20978 as the real line in the sand. This is a sell.
SX5E: Ugly, Confirmed, and Headed Lower Euro Stoxx 50 (SX5E) has looked awful for weeks and now it’s finally breaking — with two completed TD Setup 9s confirming the downtrend, yesterday’s close below TD Reference Close Down (5337.58), and a lower open, lower low, and potential down close today cementing the bear case. With TD Sequential 3 of 13 and Combo 4 of 13, there’s plenty of room for downside to play out. First key support is 5213, followed by the 200-day at 5178, then TD Propulsion Down at 5072. This is a clear sell.
