The S&P 500 is in a weak downtrend. If you want to be generous, you could say it’s neutral but I’d rather error on the side of caution. You should be on the sidelines and in the safety of cash as the S&P 500 tests its Parabolic SAR support.

I really like the Chande Trend Meter (CTM) that StockCharts added to its growing list of indicators for members.

Here’s our killer S&P 500 chart from the weekly Saturday show on YouTube:

The critical support level to watch is 2647 which is the Parabolic SAR support level. A break below this level would suggest we’re going back to test the 200 day moving average at 2560.

On the True Strength Index (TSI), notice how the green line is close to crossing below the red line. Also notice how low the TSI still is even though the S&P 500 retraced more than 63% of its downward move. The TSI never really got off the deck which points to how weak, internally, the upward move in the S&P 500 really was.

The Chande Trend Meter (CTM) has a reading of 51.51. A score of 20-60 is either flat or a weak downtrend. Notice that the last time the market fell into the 20-60 color band, it did not bottom until it hit the 33 area.

I’ve been tracking the overnight S&P 500 futures market and it’s still down as of 8:53 PM Pacific Time in the US:

The overnight futures market while off the low of the after-market hours session, does not instill a lot of confidence that it’s time to buy this market in anticipation of a V bottom bounce.

I’m staying in cash as we head into Friday and end of week trading.

S&P 500 News