The 09/23/21 blog “NYSE – New 52 – Week Lows” noted that the S&P 500 (SPX) 09/20/21 decline low had a bullish divergence of NYSE – New – 52 Week Lows ($NYLOW) vs. the SPX 08/19/21 bottom.
The daily $NYLOW chart courtesy of StockCharts.com updates this internal momentum indicator.
On 10/01/21 the SPX went below its bottom made on 09/20/21. However, $NYLOW had a minor bullish divergence vs. its 09/20/21 reading – overall a double bullish divergence.
The recent bullish outperformance of the Russell – 2000 (RUT) vs. the SPX, the corrective Elliott wave look of the SPX September decline, and bullish momentum divergences suggest a 7 to 9% correction could be underway.
The main factor for the bearish case is seasonality. October is infamous for US stock market declines. October is also a month when bottoms are made, and they can come at any time during the month.
The SPX 09/02/21 to 09/20/21 decline was 11- trading days. Adding 11- trading days to the SPX 09/23/21 short-term peak targets 10/08/21 – when the important US payroll report is released. If the SPX breaks below its 10/01/21 low, a more significant bottom could be made on 10/08/21.