The weekly chart of the cash S&P500 index formed a downtrending price bar this week. As shown in the chart we were not able to hold support at the confluence of the short (red) and medium (blue) moving averages. The downward price pulse from the recent 1552.76 high continues.
On October 19th the weekly chart produced a technical “sell” signal when the RSI failed to confirm the price high. At this time we still don’t have a “buy” signal. My current Elliott count is that we are forming a corrective pattern from the July high. Furthermore, I believe that we are in wave “c” of that correction now.
What else do I believe about the S&P500?
1) We will hold the August low during the current correction.
2) That the correction will terminate by the end of the calendar year.
I have added two likely target zones to the chart for the end of the correction. The higher aligns with the 1413-1417 zone previously discussed.
Bottom Line. All of the above work helps to “frame” the price action but here is the true bottom line: With the weekly and daily charts on a “sell” signal I will remain on the equity sidelines.
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