SevenSentinels.com

Primary Trend: Bear Market ~ Intermediate Term ~Seven Sentinels~ Sell Mode, 100% Cash

3:00... The last hour will be interesting as it may begin to give us some important clues to the dilemma discussed below, especially if we rally. We'll be watching volume and breadth in particular, along with, of course, price action. Breadth remains weak at this point, but that could change. We'll discuss that and other factors in the evening report. 

2:15... Again, to put today's market in context with the bigger Intermediate Term picture, the critical ST question that we need to resolve before moving ahead is whether, like the last three bear market spikes, this latest one is yet another that is leading and will continue to lead to yet another test of the lows of this trading range between about 1230 and sub-1100 versus SPX.... or whether instead this advance will have the internal strength to break through and carry the IT much higher. Volume patterns and other irregularities suggest the former; our Seven Sentinels Buy Signal suggests the latter. We described the factors we are assessing (breadth, volume, price behavior) and will continue to assess over the next couple of days to make that decision and either continue to stand aside for now or move forward with long positions:

1:15... Breadth remains very weak at -1500/-700 at midsession as the markets have rallied from moderately oversold status at the lows of the day, with the DJ now down 60 and Nasdaq slightly green again led by AAPL. We monitor internals carefully as we wait to re-enter markets. For now we have chosen to stand aside in cash, and will continue to do so perhaps for the balance of the week. We are watching for breadth, volume and price to reintegrate. For the time being, they remain disparate and inconsistant. If volume were to stay low on pullbacks, then increase on rallies accompanied by strong breadth while the Sentinels remain on buy mode, we'd begin to accumulate longs in a day or two.

10:50... As expessed earlier, market price and volume patterns are out of sync with the signals being produced by internals, and markets are showing unusual instability and volatility. We suspect, though, that over coming days markets will reintigrate and we'll get back to more "normal" patterns. We remain defensive for now, looking to re-enter only when that process occurs... not until. Very short term, markets have come off of extreme overbought conditions and divergent breadth and are correcting;

10:20... In a rather rare move, we made the decision yesterday to not act on the Seven Sentinels Buy Signal because of the general instability of this market, and because of volume patterns which appear to be indicating distribution. Also the late decline yesterday left reversal patterns on most major indicators. Today breadth is very negative at -2000/-1000. We have been and will continue to stand aside in cash until markets show some reintegration between the signals and behavior:

9:30... Markets are opening weaker Thursday after Wednesday's late decline. We remain cautious and stand aside in cash. We'll assess internals after the first hour.