Equities not yet oversold

The red signals as noted in last weekend's post were reinforced today. One of our indicators (also one of John Murphy's favorites) is the relationship between the 13 and 34-day EMA.  Today we saw the 13 cross below the 34-day EMA on SPX and Nasdaq. Volume on today's decline was above its 34-day EMA.

RSI settled near 42 for both composites, suggesting further potential downside before an oversold state is reached.  At that point, as we know, markets can remain oversold for some time and continue to fall.

We are in "capital preservation" mode.