MKTstate

SP500 U'12 - SET FOR SIDEWAYS

TECHNICAL STATE:  #NEU - NEUTRAL DIGESTION

Technically the MKT is in a NEUTRAL DIGESTIVE position with all indicators counter balanced. The MKT is "on the fence" with the potential to go either direction or nowhere. Pick your points and have no expectations. In this market state directional moves are not expected to be sustained. Opportunity exists on both sides of the market, albeit profit potential is limited and should be realized “sooner than later”. Markets that do end a session with a strong directional bias will have trouble sustaining that bias in the coming session, without the support of a like shift in the next session’s MC Value.

SENTIMENT BIAS: NEGATIVE – R=UT1

 The R LEVEL equal to the UT1 [UPSIDE TARGET #1] creates a resistance band with the UP [UPSIDE PIVOT] as upper extreme of this technical state. All trading below this price band will have a negative sentiment bias. Typically in this behavioral framework the market is probing higher with this zone acting as the exhaustive high point of the sideways pattern. Use caution.  Difficult trading conditions are expected. A rise above the R Level is a positive signal with the potential to produce a transition higher.

Optimal Strategy = BUY DP REVERSAL; SELL R FADE; SELL UP REVERSAL

Hedge Strategy = BUY R BREAKOUT: SELL DIR CR BREAKOUT

OPTIONS ANALYSIS 

Neutral Digestion markets offer an opportunity to cautiously sell some option premium.  Caution is warranted as the Neutral Digestion state can be a precursor to a breakout as the coiling action will build power.  There is a negative sentiment bias but directional moves are not expected to be sustained.  A breakout to the downside will bring higher volatiles.