SPX update – red alert
The daily SPX holds up so far the support round 1330 and if it not broken with 24h we rather make another attempt to the upside. The NDX looks a bit different though as it gapped down today and is already on its way to the 2300 support. It is only a matter of time for the SPX to follow as an intermarket divergence is a classic pattern for tops. We are in the process of creating Bearish weekly divergences all over the place and markets. The mantra from now is sell the rallies for the next 2 weeks and build a short position as we may not see the 1370 once again and if thats a level to sell heavily into. We are technically in week 7 which should be up but if that can not be delivered the risk is even bigger that a crash might come any moment. Important is to get prepared for some rough weeks as an escalation can come from many angles as america has reached its debt ceiling, EU crisis with an arrested DSK and the obvious end of QE2 makes the market very vulnerable. Volatility will be on the rise and a steep correction is imminent.