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With the recent down move I've had a lot people ask me when to buy and those that are setup short are quite concerned about a face ripper bounce.  I've also had people outright tell me to buy too.  This isn't usually what I hear when there is a durable bottom.  People still believe in the bull market that is now in the past.  There is real fear on both sides of the market and yesterday's note titled "Tug of war" was my exact point.  I should mention again my own time frame generally is spread out by weeks or months and I size my positions properly to withstand volatility and I employ stops on everything.  I preach this to all and hope people do not make unnecessary mistakes.

If your time frame is shorter term at a hedge fund or prop trading firm then you have to be involved in every bounce attempt.  I understand and I've been there too.  But part of the topping process involves breaking the moral and fortitude of the bullish buy the dip people.  I'll put it another way.  When markets are going up and shorts try and short every dip but just end up covering, their moral and fortitude breaks down and eventually they give up.  (Yes I have personal experience with this feeling)   Every dip seems to bring in buyers and they have hopes that they caught the bottom but that bottom gets taken out and they start to get less enthusiastic about buying those dips and their trigger finger gets faster in risk avoidance mode.  

Below I illustrate with some charts why I do not believe a durable bottom is in place with ANY equity market. Bounces will happen and there could be one at anytime.  But this is not the time to play hero with this week's equity markets steep declines.  Manage your risk on both sides and stay nimble.  For a little Friday laugh may I suggest this "Don't Stop Believin'" with Jimmy Fallon and Will Farrell.  Have a great weekend!

Notable:

• US Markets - Sentiment not back to the recent lows
  
• VIX Index - Upside Countdown in progress
  
• Europe Market -  Breaking February lows
  
• Nikkei Index - Looks lower
  
• S&P Index with RSI DeMark Studies - Daily, Weekly, Monthly Time Frames
  
• Bloomberg World Index - Looks lower
  
• FANG - Daily, Weekly, Monthly - Exhaustion signals on all three time frames
  
• DeMark Screens
  

SPX bullish sentiment is at 25% and about in the middle of the recent range.  The market made a bottom in February at 9%.  I said at the time it was OK to buy the bounce then but sentiment rarely bottoms in a week and it could take weeks. 

SPX with the bearish wave formation looking like wave 3's downside price objective is possible.

SPX with the countdowns visible show it with a downside Countdown on day 6 of 13 and now under the TDST support at 2673.  A bounce to the 20 day at 2695 is where I would likely add to shorts.  I'm already pretty short but do have more firepower and will go very net short If I want.

S&P 100 OEX also has a downside wave formation and is also below it's TDST support at 118.64

OEF with the Countdowns show it on day 5 of 13 with it's downside Countdown

QQQ has held up much better due to FANGS (more on that below) and now has a downside Countdown on day 3 of 13

CNBC Index (Dow Jones) is on day 5 of 13 with it's downside Countdown

VIX held the 50 day moving average on the downside and now bounced with an upside Countdown on day 4 of 13.  I don't advocate trading the VIX ETF's for many obvious reasons

UK FTSE 100 is on day 7 of 13 with it's downside Countdown and breaking the February lows.  How about that upside exhaustion signal in January?  

Italy is at support and on day 9 of 13 with it's downside Countdown.  

SXXP Euro Stoxx 600 also broke February lows and is on day 7 of 13 with it's downside Countdown

DAX gapped hard today and broke the February lows (wave 1) thus locking in the wave 3.  The price objective is 11,210 but wave 3 just needed to make a lower low and it's locked in and the price objective isn't the main issue but the wave count.

Nikkei bullish sentiment is at 30% and I expect to go under 10%  

Nikkei with the daily wave pattern needs a little more to break the February lows to lock in the wave 3.  

Nikkei monthly shows the upside exhaustion signals are the recent highs and 3 other times in the past 15 year this has also occurred.  -16%, -60%, -29% and it's only down 12% now

These are SPX charts with the bottom indicator a RSI with DeMark overlay.  The first one is the daily and it shows the bunch of upside exhaustion signals from last year that stalled out but didn't turn lower but that was the market we had and now we have a new market.  On February 9th I was highlighting the green Setup 9 on the Index and I had the the same 9 on the RSI too.  With the bounce the RSI didn't achieve much and now it's headed lower and not oversold

The weekly had some exhaustion on the RSI at 90%!!!  When the down move happened in February it woke up the extended RSI to the downside and I believe there is more to go before it's oversold like February 2016

The monthly RSI also had exhaustion and woke up to the downside.  This too has more downside risk to either the February 2016 levels or 2008/2009 market

Bloomberg World Index also made a lower high bounce and has a wave 3 price objective that would take the index back to September levels.  

Bloomberg World Index is on day 6 of 13 with it's downside Countdown

FANG on a weekly time frame had a recent upside exhaustion and keep in mind it's up 165% from the February 2016 low.  Hey Jeremy Grantham still believin in a meltup?  

FANG monthly had an upside exhaustion in February.  

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