chart: daily SPY, what to do now

Courtesy of eSignal

Recent posts have shown that the stock market is in OB territory.  What do we do now and what should we look for?  In the daily SPY chart above there are a few indicators that are similar to most indicators that are commonly used. 
First window is a price chart with a blue trend line.
Second window is a MACD.
Third window is the ADX.
Fourth window is a fast OB/OS indicator.
When the price breaks below the blue trend line a sell signal is generated as you can see earlier in Dec.
Then the MACD should also give a sell signal also seen earlier in Nov.
The ADX's DMI red line will cross above the DMI blue line indicating more selling than buying as seen in Dec.
The price will then "probably" be short term OS.  In many cases, but not in all cases, the market will try to rally before turning down again.  If you look at the fourth window you will see the indicator in OB territory ( green circles) after the sell signals in the first three windows.  When this happens it is usually a good time to lighten up on weak stocks, sell and or sell short and of course with very important stops in place.   Because, head fakes do happen!
Today, morning strength was given back in the afternoon and that is usually a sign of a weak market. 

Be careful and ALWAYS USE STOPS !

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This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions.  
Past performance is not indicative of future results