The Cumulative Tick still looks weak here and doesn't show a reversal yet.
Interesting that the largest caps were much less impacted by the sell-off.
But all in all, the pullback in the 10Y rates yesterday, combined to the equities pullback have helped the $SPX settling down in a slightly undervaluation area.
The US$/Euro continued weakening, together with the weakening of the 10Y US rate compared to the 10Y German rate.
You might think that money flowing out of the US$ is US equities negative, but I believe that this move might be close to reversing as the long-term rates differential now looks very close to its historical low. Hence, European investors might want to move money back into safer US assets.
The question is: should we buy or not here?
If inflation expectations do not rise in the coming months, then equities will slightly gain as far as the 10Y rates does not push higher. However this move will be slow and it is still best waiting for oversold market conditions before buying.
For example, the Market TEV extension indicator should fall below -5% and then above that level for an oversold buy signal to be triggered.
Similarly, the number of days to a short signal indicator should fall below -2.5 days and then above that level in order to trigger a buy signal.
These two above indicators will point to extreme entry situations, but we might not reach such situations.
On the other hand, the Mcclellan indicator shown below points to a flattening of the curve, which might indicate the potential of a coming market reversal.
Conclusions:
Wait and see, but the next move will be up.
