Correction ahead?

Is recent sell off a sign of bigger correction to come? Let’s take a look on what our models say.

Main model on daily level is signalling major bearish sell signal. It combines excessive optimism in call buying vs. put buying and cluster of distribution days in a certain period of time. This signal triggered sever times since 2009 for SPX and also at the start of bear market in 2007 in SPY. I expect more downside ahead or at least volatility will pick up. Chop fest is also possible after such signals.

QQQ triggered sell signal even earlier on Friday 26th of February. Does not bode well for Qs.

I would be very cautious about investing money in weeks ahead. Correction and consolidation ahead. I believe we are still in secular bull market and this is not the top. If it is my models will warn me to get out. Good luck.