Breaking point

Almost a red light

The RumWave chart is very, very, very close to a "sell" signal.  It technically has not reached my trigger, but it literally could not be any closer based on the fidelity of my measurements.  I think the market turned a corner in the last two hours of trading today, and I'll show you why I think that.

First, the scores:

Take a look at the Daily and 4 hour score oscillator graphs (above).  They have turned over from their highest level.

Above is a 4 hour candle chart of the DIA (an ETF of the DJIA.)  The heikin ashi candle finally turned red in the form of a "doji" which is a momentum shift indicator.  The RSI and Stochastic are sharply declining.

A quick look at the SPX (above) shows the same indicators, but traditional technical analysis would have us look for an increase in volume for additional confirmation of the trend change.....

The chart above shows the SPY, 1 hour candles, with volume.  I've highlighted a horizontal line at the volume during the last hour of today's selling.  The level of volume was much higher than has been typical for all of January.

The last chart I'll reference tonight is the Russell 2000.  I like to look at the small caps because I believe they often lead the large caps lower.  Yesterday the Russell was showing some weakness while the Dow was moving higher.. red flag #1.  Today around noon the RUT chart (above) showed a red candle and a sharply declining RSI.  The last candle of the day was confirmatory in that it showed an increase in momentum to the downside... red flag #2.

I doubt market bulls will just step aside and let the market get hammered lower, so there may be some flailing around for just a bit, but I fully expect to have the RumWave "sell" signal in the next day or two.