My system gave a momentum buy signal on SPX at the close today, on the daily timeframe. When the sell signal was generated on the SPX on 1/13, i had noted that we would go down to test the rising EMAs (34/55). We tested the 55 EMA yesterday and we had a nice green candle today on good volume and breadth.
The last few days of selling was on high TRIN, which means it was a narrow based, high volume selling in few issues (mostly the large caps), while the small caps were displaying high relative strength.
From a e-wave perspective, it appears that we have completed a irregular flat from 12/14/05.
For my buy signal to be valid here, we should hold above today's low of SPX 1264.68. Any daily close below that would put the buy signal in question. Any close below the swing low for SPX at 1259.42, even on a intraday basis, will kick the system back into a secondary sell, in which case things could get nasty on the downside.
Anyways, i have a buy signal and will be looking to buy dips rather than shorting rallies as long as this buy signals holds.
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