Weekly Commentary

Friday's downturn meant that there will be no upward extension of Minute2.  Minute3 of Minor3 started at the high Tuesday.  I1 was rallying Friday prior to the rounding over phase starting Monday and lasting through Wednesday.  So, Friday's move was beyond the Consumer Sentiment reading (the market was down substantially well prior to it).  I believe that it was a "tell" that a big move lies ahead.  The following I1 chart shows an increased amplitude to show this rounding process into Wednesday's I1 high.  Note that Friday was still increasing at a decent rate.

I still have minimal longs going into Monday but the DJI took out critical support, which means that the 5-minute, 380-unit M/A will now be offering resistance.  I can't go short prior to Wednesday afternoon, but I can hope for the market to retrace or back-and-fill until then. 

The daily technical composite continues to come off of it's buy signal.  Currently at +16, a return to +6 would indicate that we are ready for decline technically.  The blue line is the composite against the green DJI index:

The upcoming I1 decline from Thursday, 7/22 through 7/29, is not deep nor does it reach anywhere near a sell signal.  Nonetheless, I believe it will be a fruitful time to be short.  The I1 advance thereafter takes it to 4.6 which is a goodly distance beyond the 7/21 peak and it lasts all the way into 8/13.  My favorite scenario is that the decline from 7/21 to 7/29 will be deep and the recovery into the second week of August will not approach the peak again.  Although I am a big fan of I1, starting the second week of August the market will be living on borrowed time.  I'll be prepared to short on critical support break at that time.