As of 10:30 a.m. EDT, the S&P 500 has clawed its way back into the black for the month of October, which is impressive in the face of weakening internals. A good step for the bulls would be a close above the 20-day moving average, which sits at 1,447 and change.
Thus far, shorts relative to longs have not been able to complete step 3 of 3 needed for a bullish trend change. If the chart below cannot recapture the green-dotted line, it is bullish for stocks.
At the 12:38 mark of Sunday’s video, we noted two potentially bullish conditions that were in place on the “risk-on vs. risk-off” chart below of emerging market bonds relative to Treasuries: (1) the black trendlines were holding (still are), and (2) RSI was above 50 (still is). If RSI can recapture the blue trendline (see orange and red arrows), it would increase the odds of another leg higher in risk assets. If RSI is rejected at the blue trendline, it leaves the correction door open.