Update for the Market monitor from Timelysetup

Previous chart can be found here.

As we can see, we are still in the negative territory, which indicates it is still in the down trend. And the pink histogram is dropping from the high. My prediction for the next few days is that, we are still going to have some range bounce to continue forming the bear flag. I will wait the histogram to go further down to close to the zero line to short. Eventually we want to see the divergence to form a bottom.

I checked the SPX chart from Oct 21, 2008 to Oct 27, 2008. I feel it is very similar to what we are now. If we do see a sharply drop from current bear flag on next Monday and lasting up to Wednesday, the histogram will drop to 0. But that is not going to be a short signal. Instead I need to go long for a reflex bounce, as the histogram should continue becoming negative, but turn to positive very quickly. Let us see what will happen.

1. When histogram drop from positive to negative, if price is going up, short at the high.

2. When histogram rise from negative to positive, if price is going down, buy at the dip.

3. When histogram crossover, do not initiate position immediately. Wait for one to three days. Similar to the idea of follow through day.