Last week I mentioned that we should get a short term top. We got it this week. Now what? Let’s start with 7 day momentum and sentiment for the S&P 500 Index (SPY). It has now made a clear break below its uptrend line. This indicates that the bears are in control for the moment. We’ll be watching for any downtrend in sentiment to be broken to the upside to indicate the dip is over.

SPX also broke below minor support at 2450 this week. That level is now minor resistance. However, the large range between 2400 and 2500 will likely restrain any short term moves. Meaning, a break of either level will point the next intermediate term direction.

Breadth between the most bullish and bearish stocks on Twitter is sending mixed signals. It has been diverging from price for three months, but it’s still well above the normal bullish range. This gives the market plenty of room to work with for a short term dip.

Conclusion

We’ve got the start of a short term dip. The bulls want to see SPX reclaim 2450, 7 day momentum to start a new uptrend, and the number of bullish stocks to break above its negative divergence. It make take a few weeks of weakness in the market before we get a resolution. The most important thing to watch is the range between 2400 and 2500. A break of either level will give us an intermediate term direction.