The weekly chart of the cash S&P500 index formed its third consecutive downtrending price bar this week. The downward price pulse from the recent 1552.76 high continues.
Last weekend I noted that the RSI had produced two “positive reversal” signals. Easy come, easy go. These were negated by the price action turning lower and causing the RSI to break below the trendline established by the reversal points (see today’s chart).
Technically, this brings us back to what I wrote two weekends ago:
“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 still hold to those thoughts and that the Elliott pattern best fitting the weekly chart is a Contracting Triangle from the July high. The question to face on the daily chart is whether or not we have just have ended the “c” wave of that correction. Note that we have bounced from within the first of my two target zones that I have displayed over the past few weeks.
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