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Without focusing too greatly on the fundamentals of the US equity markets, or even the macro environment that will largely dictate investment flows, we can see there is a very clear line in the sand, where a technical break will suggest increasing short positions in US indices.
That level in the US 500 cash is 2116, which represents both the September low and 38.2% retracement of the June to August rally. A firm close below 2116 will therefore suggest a likely move towards 2000, with market volatility likely to increase accordingly.
For Wall Street Cash , a firm daily close below 18000 would trigger a strong sell signal and the bias should again be to trade on the short side.
If we focus on the daily chart we can see that the Wall Street cash has broken below the rising trend support within the September consolidation triangle pattern. This would in theory target the 17,500 area, but I specifically want to see the index close below 18000 to 17990 area to confirm a more bearish bias. As we can see from the blue rectangle area, the market has been happy to support into this area, so a close below here would signal the bears are in full control.
I would be looking to increase short exposure to US equity markets on a close through 2116 and 17990. Put this on the radar.