Rebel Yell: EC Spread On SPY Updated Through Last Night

by James DiGeorgia | 05/24/2016 08:03 AM
Rebel Yell: EC Spread On SPY Updated Through Last Night

Since our last update on the Erlanger EC Spread, we noted that the Erlanger EC Spread on the S&P 500 via SPY was starting to give us signs of problems as it had crossed below its signal line. The EC Spread closed in on 0 and then move above but had been unable to clear its signal line.

A couple weeks later and the EC Spread is still below 0. I noted this would be a problem for the market and a hold will tell us that maybe this is as bad as it will get. We are definitely in a corrective phase. What is notable is that SPY is still higher than its April 7th close at $203.95.

Also, we have highlighted the Heikin Ashi Candlesticks. Green is good. Red is bad. Currently, we have several days of green. This needs to be watched closely as it is occurring when the EC Spread is potentially making a turn to aggressive buy.

The takeaway is the right the S&P 500 is having a hard time deciding whether it wants to go back to 2050 or move down to 2000. We remain watchful here. The next week will be a pivotal week.

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