NYSI Working Magnificently - A Major Sell Signal

Good evening my friends.  As you may have noticed, I haven't been in much of a mood to write as of late.  I'll cut right to the chase... sometimes people can piss me I find people to be so aggravating that I get to the point when I finally just say "to hell with it, I'll just keep on doing what I do in my own office every day and just use it myself".  And for the most part that's what I've been doing for the past couple of mumfs.  [Don't ask me why I like to spell that word that way because I don't know.  It makes me chuckle I guess.]

BUT... tonight I read a comment on our friend Pretzel's site that inspired me to drop off a comment there.  The comment that jolted me out of the 'I don't feel like writing' coma was written by a great participant named 'aweedram' wherein he offered a chart that looked "very doable" to me.  I certainly appreciated his effort and his vision, BUT I also have good reason to believe that the odds of it actually developing are very, very slim.  So I left a comment on Pretzel's forum (not on his fabulous EW analysis site) in response to 'aweedram' and basically it went like this:

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BUT... I.also have to defer to several studies I have ongoing at all times. God, there are so many of them but the ones pertaining to market internals are now speaking volumes. Here's a daily chart of the Summation Index for the NYSE:

NYSI Daily - Click here for a live and updating version

What I've been watching is the negative divergence seen at the top of the recent action (red and yellow arrows). First of all, the histogram was indicating that a reversal in NYSI was imminent. What wasn't clear was whether or not the market would roll lower with it. If the market does not roll lower with NYSI, as seen in Feb. of this year, then a different form of neg. divergence is setting up between NYSI and the market itself (NYSE). In a case such as that, we know the bulls are still in charge and we'd have to wait for some form of a second rollover in NYSI that coincides with the market finally turning south. We saw that in March of this year and all that really happened at that time was that NYSI simply consolidated until the NYSE caught up with it and finally decided to tank. At that time they both keeled over and puked at the same time. Kind like me and my old drinking buddies used to do.

However, as I noted on this chart back on June 12th, if the market rolls over FIRST or COINCIDENT WITH a NYSI that has turned lower... watch out because it's the real deal. The chart is actually from this article which I had published regarding the coming bounce.  And man... did the market ever bounce.  Five ugly times to be exact.  But as demonstrated in the original publication of the chart... we have a REAL DEAL goin' on here now. And all indications are that we probably can't even expect much of a bounce until August 6th or 10th, thereabouts. Not a big bounce at least. Some readers might recall my explanation about 'why' momentum indicators do not produce a divergence at the top of a wave 2 or a wave C. Although not exactly the same, this is very similar to one of those cases. In that previous explanation I was referring to an RSI or stochastics indicator. But the 'cause' is the same in this case... tthere will be no more upward waves to cause a neg. divergence between NYSI and the NYSE.  Please don't misunderstand... that doesn't mean there won't be a bounce.  It just means that if there is a bounce, it will be a dud in that the market will not reach new highs.  But to reiterate, even so... we shouldn't see any bounce of any significance until somewhere around Aug. 8th give or take a day or three.

When I look at the futures tonight, and at all the pos. divergences on every time frame, I'm certain a bounce is coming. But according to the much more significant and reliable signals coming out of the market internals data, it's not likely going to be much of a bounce... just another great shorting opportunity. But I've learned my lessons by now... the Orcs of New York are so powerful that God only knows what they can do. My confidence has been shaken to its very core by those bastards but I'm going with what I'm seeing... this market is gonna tank big time.

I hope everyone out there is doing real well and that you're able to capitalize on the markets in the weeks ahead.  Personally I don't think there's much chance it's going to be anywhere near as choppy as it has been since early June.  Think... "more linear".

Until next time... whenever that is... stay well!
AR

Tranquility Base