Deployed Cash Today

With improved money flow as measured by Chaikin and the formation of a positive RSI divergence at last Friday's close, I deployed all sidelined cash into the market earlier today.

Positive Divergence Formed, BUT NOT SO FAST!

The rally on Friday was enough to create a weekly positive RSI divergence. However, in looking at money flow (as measured by the Chaikin Oscillator), it didn't offer any confirmation to support a fully bullish stance at this point. My short-term options-based indicator is still projecting a buy signal on the 18th or 19th. Based on the parameters discussed, I will likely invest 50% of sidelined cash on the 18th or 19th; however, if or when the Chaikin Oscillator breaks the downward trendline as depicted in the chart below, I will invest 100% (given that a positive divergence has already been formed). Any breakdown below the prior week's low will change the aforementioned "entry" plan.

Re-entry Strategy

I just wanted to share my approach for investing the cash that was recently sidelined. My plan is to deploy 50% of sidelined cash into the market when I get a signal from my short-term indicator. Based on projections from my model today, it appears that a bottom might occur on our about August 19 -- when this date becomes firm, I will post another update. If on the other hand, a positive (weekly) RSI divergence is formed OR the S&P breaks its trailing ATR3 stop which now sits at 1963, I will buy 100% of sidelined cash. I expect that this trailing stop will continue lower over the next 1-2 weeks. It's conceivable that the short-term indicator might "fire" first, so I might be re-entering the market in two stages. Although I'm not targeting any specific level, my Fibonacci analysis indicates strong support at 1860 and 1820.