I am seeing a few things that cause me consider that we may see a break to the upside. I am currently short but with diminishing conviction.
Point 1. NYSE Co-Action chart. Co-Action is defined as a 50-day moving average of percent of NYSE Advancing Issues minus Declining Issues. The deeply oversold bounces have been reliable indications of short-term market moves to the upside and quite often longer-term moves to the upside. The recent bounce is from the deepest level since January 2009. So a conclusion is that we may see more upside with an unknown upper target.
Point 2. The S&P 500 is forming an apex with possible false breakdown having just occured. It is more often the case that apex breakouts first break to the wrong side of the triangle. Usually the real breakout occurs 65%-70% towards the apex. I have marked the 65% point with a vertical line. It is true that the NASDAQ does not look the same; it looks more like a classical bear flag. So the false breakout conclusion vs. bear flag conclusion needs more time to sort out.
Point 3. The weekly Coppock has been attempting to give a signal for a while. This can only keep up for so long before the real signal must occur. These usually precede a significant move to the upside, sometimes with a retest before the real move.
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