Why am I counting this rally on the cash s&p500 index as a corrective (bear rally) a-b-c zigzag pattern rather than a 1-2-3 of an impulse (new bull market rally)? Am I biased?
Perhaps. But I do try to make Elliott counts that "fit" my technical analysis work. One aspect of which is momentum. As the market pushes up here all I can see is failing momentum. This developing bearish divergence is coming at a point in the RSI where momentum would be expected to fail in a bear market rally (around the 65 area). In today's chart the top indicator is the RSI. But note below that is the confirming indicator and then the Derivative oscillator, and both are lagging badly here. If price were to march higher and higher over the coming days this pending divergence between price and momentum could be nullified. But I dont expect that to happen. But of course I could be wrong!
The price chart shows Gann lines and Fibonacci retracement levels. 1542-1545 is the last resistance level before the all-time high.
And I will admit to being wrong if we get a new high. But for now I continue to be out of equities and on the sidelines.
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