S&P 500: Dead cat bounce?

By Colin Twiggs
August 31st, 2015 2:00 am EDT (4:00 pm AEST)

Advice herein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs. Accordingly, no reader should act on the basis of any information contained herein without first having consulted a suitably qualified financial advisor.

After Friday's narrow consolidation between 1970 and 1990, S&P 500 September 2015 E-mini futures broke support at 1970, indicating moderate selling pressure.

S&P 500 September 2015 E-mini

Sound domestic economic performance is likely to ensure that the S&P 500 returns to its primary up-trend in the medium- to long-term, but upheaval in international financial markets may have sapped investor confidence in the short- to medium-term. The doji star on the daily chart reflects indecision. A close below 1970 would suggest another test of support at 1870, with respect of resistance at 2000 a bearish sign. A 21-day Twiggs Money Flow peak below zero would also warn of selling pressure. Follow-through above 2000 is less likely, but would indicate light selling and a snappy recovery.

S&P 500

NYSE volumes reflect the increase in activity, starting Friday August 21st, with daily volumes over 2 billion and short sales jumping to 800 million. It will be worth keeping an eye on short sales this week. Recovery above 600 million would warn of rising selling pressure.

NYSE Daily Volume & Short Sales

Most of the poverty and misery in the world is due to bad government, lack of democracy, weak states, internal strife, and so on. We do need to intervene, to improve political and economic conditions inside countries that have bad governments, where people are suffering. One way of doing this, without violating sovereignty, is through constructive actions — reinforcements and incentives for countries that are moving in the right direction, toward an open society, a market economy, et cetera. That is what I'm advocating. I'm advocating preventive action of a constructive nature. And I would use military force only as the very last resort, when nothing else works.

~ George Soros


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