We have been showing this daily chart of the cash S&P500 Index for a few days, as plotted with the indicator known as The Fisher Transform.
|S&P500 Cash Index - Daily - With Fisher Transform|
Again, one of the reasons for liking the indicator is the very smooth manner of transitions once it locates the middle of the cycle and the potential divergence. The divergence, as we noted yesterday, was actualized when the first histogram bar ticked lower. There are now three such lower histogram bars. Today's slightly red candle is a Doji, after a prior Doji three sessions ago. And - as we noted intraday - just short of a 62% retrace at the end of the day, after a larger 62% retrace at the beginning of the day.
None of this would seem to help the bullish case at the moment. Perhaps resolving the looming shutdown talks might help that case. Or, perhaps, resolving China trade agreements with the U.S. would go a long way. There are also lots and lots of FED speakers coming out this week, again. Maybe they will talk the markets up. Maybe. Maybe.
Meanwhile, U.S. Tax Refunds in the first week are coming in SMALLER than last year. Here's a LINK. Hey, I thought the agreed tax plan was supposed to be a boon for middle America! Who do you know that swallowed that one hook-line-and-sinker?!
There are other indicators you could look at. One worth looking at today is the daily RSI(14). Does it have that typical look of the 'the green blob' over 70, which often indicates a third wave? I encourage you to look and see for yourself. Also, as we commented earlier today, keep your eye on the %D of the daily slow stochastic of the ES E-mini S&P500 futures to see if it continues under the 80% level. If it does, that could result in a trip to the 18-day SMA or lower.
That said, while the upside is not showing much from the technical tea-leaves, the down-side would need to see price acceleration lower pretty soon to make that case more effectively, too.
Have a good start to the evening.