Monthly Structure SP

In the past 40 years there have been 4 other instances of clean monthly sell divergences.  Each time it has led to a sell off of at least 6-10 months, and a penetration of the lower monthly Keltner channel. Anytime you are assessing an overbought or oversold condition, put it in the context of the higher time frame structure.  If there are still higher time frame divergences in play, the daily oversold conditions can get run over. There is no reason why this market can push down to 2500 – 2600, but not without good trading swings along the way. Wait for the bear sentiment readings on Investors Intelligence and AAII to rise to the higher levels before an aggressive investment opportunity presents itself.  In the meantime, enjoy the increase in volatility!