It was an exciting day to be a bull yesterday as the daily cash S&P500 formed an uptrending price bar. The downward price pulse from 1520.77 is over at Monday’s low and a new upward pulse is underway from that point. However, there were some small items of concern. We did not have a clear reversal bar (Reversal Day; Signal Day; or Snap-Back Day) and it was what Bill Williams calls a “Fake” bar. This describes a situation where even though price is moving easily the volume has actually decreased. It is a warning sign that the prior trend will resume unless volume comes into the market.
On the other hand (we always have two hands don’t we?) I finally got a technical “buy” signal! Both the Composite Index and Derivative Oscillator (shown on today’s chart under the RSI) turned up after making higher lows than the RSI (top indicator). This would seem to confirm the Elliott wave count presented yesterday that Monday’s low marked wave v” of c’, which implies that the entire decline from October 11th is over. Note that I have been saying v” of c’ instead of v” of 3’. The wave count v” of c’ implies that we will see new highs before we ever break Monday’s low. If Monday’s low were v” of 3’ we would break to a new low before we even broke above 1490.40.
Therefore, the first test of the current wave count will be previous support; which is now resistance, at that 1490 level. If our count is correct we should break this level without going to a new low.
Since I believe the hand that says the low is in, my problem is the mechanical one of where to enter a long position. For me, I am most comfortable waiting for the first pullback. This is defined by my timing work and should occur before the end of next week. More on that whole mess later.
No comments:
Post a Comment