US Indices – Inflection point?!

In tonight’s trading, we should clarify the short-term direction for US Indices.

Except for the Dow, the indices all had a ‘pin bar’ – a pattern I have found reliable to mark short-term lows or highs.  If a low is in, then we should see a bullish conviction bar where:

1. The Russell make closing highs.
2. The NASDAQ and S&P close above Tuesday’s high
3. The  Dow close above Wednesday’s high.

Of the three, the Dow is the least likely to happen – nevertheless, necessary, if we are to see a move up to July 9, the next seasonal high.

If, on the other hand, we see a bearish-conviction bar, especially one that closes below today’s (June 19) low,  then we’ll probably see a movement to the downside.

For me, the volume-price relationship has been suggesting a sell-off. Since May 31, the volume on up moves has been flat to declining whereas the ATR has been declining. The pattern usually augurs for a topping process in the works. Also, we have the divergence among the indices –

• The Russell is in a clear bullish mode.
• The NASDAQ is leaning to bullish mode – I need to see my filters, time (WPC), price (acceptance above the maximum extension) and momentum (LCC) confirm the breakout
• The S&P and Dow still in congestion mode.

If we can see a solid breakout with a realignment of the volume-price relationship, that should drag the S&P and Dow to new highs. On the other hand, a rejection of last night’s price action should produce an Upthrust Change in Trend signal in the NASDAQ – I am using this pattern to tell me that the indices have topped.