This month’s newsletter stated that notes to clients will be scaled back in August “unless something happens,” well, it’s happening, exclaims Ian Murphy of MurphyTrading.com.

Fed minutes about tapering bond purchases and rising Covid cases are being blamed for the risk-off sentiment today, but market internal indicators already flagged the underlying weakness in the equity market.

For example, in Tuesday’s note I observed how the negative signals we are seeing in the Composite and Pessimism indicators (black arrows), “always occur before a selloff.”

So, is this going to be just another pullback in the long-term bullish trend of the S&P 500 (SPX) or are we looking at something deeper? As always, it’s best to avoid predictions and look for technical levels to confirm the current market trend.

Both long triggers in the Help Strategy were stopped out yesterday for a small profit, 1.75% on Micro E-Mini futures (without leverage) and 4.19% on the SSO ETF. Now, it’s a case of waiting for the required six signals to confirm the next trigger.

Should the selloff gather steam, there may be an opportunity to short the US market, and I will be watching closely for signals on the VIX Strategy when the regular session opens in the US at 09:30 ET.

Learn more about Ian Murphy at MurphyTrading.com.