Bearish Momentum and Sentiment Signals – June 2021

June 15,2021 could be an important date in the history of the US stock market.  In the first minute of trading the S&P 500 (SPX)  made a new all-time high then went down. Also, the daily VIX recorded a higher bottom vs. the SPX new high. As noted in several blogs this is a reliable signal for SPX  tops. The VIX divergence is a subtle sentiment signal that traders are  becoming more bearish.

The daily SPX – VIX chart courtesy of Trading View illustrates the subsequent action.

The SPX has been trending down since the bearish divergence.

The daily RSI also had a significant bearish momentum signal.  Not only was there a double bearish divergence vs. the SPX  04/16/21 high, but the RSI level was bearishly alarming. On 06/14/21 the RSI reading was only 63% and indicates very weak upside momentum.

Additionally, on 06/18/21 daily RSI closed below the reading it made at the SPX 05/19/21 bottom. This indicates the SPX could soon be trading below the 05/19/21 bottom of 4061.

Trader short 100% non-leveraged SPX related funds on the open of the SPX 06/21/21 trading session.  Use a move above SPX 4290.00 as a stop loss for 50% of the position.  Use a move above SPX 4310.00 as a stop loss on the remaining 50%. 

The next blog will summarize the long and short-term bearish evidence for US stocks.   

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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