The S&P 500 retreated below support at 1850, warning of a correction, but the primary up-trend remains strong. Trend strength is depicted by this weekly chart of Ichimoku Cloud, with a buy signal at the start of 2013 and price holding high above a green cloud indicating trend strength.
Bearish divergence on 13-week Twiggs Money Flow indicates medium-term selling pressure, consistent with a secondary correction, but respect of the rising trendline would signal a healthy up-trend. And recovery above 1850 would offer a target of 1950*.
* Target calculation: 1850 + ( 1850 – 1750 ) = 1950
CBOE Volatility Index (VIX) is rising and a sustained shift above 20 would signal an increase from low to moderate risk.
The Nasdaq 100 also shows bearish divergence on 13-week Twiggs Money Flow, warning of medium-term selling pressure. Breach of the rising trendline would test primary support at 3400, while respect would confirm a healthy up-trend. Recovery above 3650 would offer a target of 3800*.
* Target calculation: 3600 + ( 3600 – 3400 ) = 3800