I’ll keep this post short and sweet as the story remains the same, contrary to what you may hear. The downtrend looks well established and sustainable. All indices are trading below model resistance. And equally important, momentum looks well established. I am showing no momentum loss. That is key.
I remind readers, I do not use traditional measures of momentum, many of which from various reading I have done are indicating a bounce is at hand. It is possible those claiming markets are going to reverse here will be right. But they have no basis to claim that. Just like I have no basis to claim downside targets beyond a day or two.
But I can tell you based on the model, that probability favors additional downside. And I can also tell you that we are now in a phase 2 move. This is the phase that is sustainable, is held intraday by model resistance and shows little fear. Case in point, the vix was down today, breadth was minus 300 and TLT was down far more than it should be. I reference TLT because the underlying assets in yield and futures were not indicative of such a move. And when I look at implied volatility on TLT I see too many traders wanting to short Treasury. All of that shows zero flight to safety. Yet.