Stock Index Futures Have Biggest Losses of The Year, But Will The Bull Market Continue?

Recently, stock index futures suffered their biggest losses for 2013. Up until two weeks ago, S&P 500 futures continued their historic advance from 1432 to 1685. Since topping out in the third week in May, there have been many technical indicators suggesting that a top has been put in. Based on these new technical signals, I believe many sellers have recently entered this market.
The major cycles remain positive. The intermediate and major cycles remain historically overbought, while one of the minor cycles is in the verge of reversing. Volume has significantly increased on the downside since the top was put in. The short term volatility signal from the VIX is turning bearish.

June
13 S&P 500 Futures - Daily 


 
  Chart provided by APEX

There is one other indicator that is getting a lot of attention now, which is called the Hindenburg Omen.  The Hindenburg Omen is named after the Hindenburg disaster of May 6, 1937, in which the German Zeppelin Hindenburg crashed and burned.
The Hindenburg Omen attempts to measure the health of the stocks within the New York Stock Exchange and the entire stock market as a whole. The goal of the indicator is to signal increased probability of a stock index reversal. The rationale for the indicator is that under normal trading conditions a substantial number of stocks may set either new annual highs or new annual lows, but they should not both be doing so at the same time. The signal comes into play when there is the simultaneous presence of many new annual highs and annual lows, which may signal a major reversal.
There are several conditions that comprise the indicator. The main ones are:

• The daily number of new 52 week highs on the New York Stock Exchange and the number of new 52 week lows must be both greater than or equal to 2.8% of the sum of the NYSE stocks that advance or decline on that day.

• The NYSE index must be greater in value than it was 50 trading days ago.

• Each condition must occur on the same day. Once the indicator has occurred, it is valid for 30 days.

In the past two weeks there have been two such occasions when the Hindenburg Omen made its presence known and the market responded accordingly. We acknowledge that the Hindenburg Omen flies in the face of the Federal Reserve's very bullish quantitative easing program. In spite of this, the question must be asked, "Is the Hindenburg Omen telling us that the influence of the Fed's unprecedented quantitative easing program is coming to an end and lower prices are ahead for stock index futures?"
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