A New Price Pulse Sequence Underway

Although the overall market continues to “form a line” (a sideways move) it is now apparent that the Z-pulse concluded at the low of February 7. Moreover; although not definite, it appears that the subsequent A-pulse ended at the February 13 high and failed to break the “C-Y” trendline on the Intermediate price pulse chart. These events are all depicted on today’s chart.

The failure of the A-pulse to break that trendline told us that the retest of the January low can not be confirmed complete. We may still have to go back and test that level. However, the fact that we are now in a new price pulse cycle (A-B-C-X-Y-Z) begins to lessen the value of that ”C-Y” trendline. This is particularly true once the A-pulse is confirmed complete. In the new price pulse cycle the breaking of the A-pulse peak becomes the signal that the previous downward move is complete, not the breaking of the “C-Y” trendline. Thus the new horizontal line drawn on today’s chart at 1369.23; which becomes important once the A-pulse is confirmed complete.

With the daily chart still on a technical “buy” signal (first discussed in my January 24 post) the odds favor that even if the market were to start the week lower in a continuation of the B-pulse, the A-pulse peak will be broken when the market moves up in the C-pulse. If we start higher the question becomes whether the A-pulse completed on February 13 or not and what constitutes a real break of the “C-Y” trendline. In any event, the question is whether to buy the “breakout”; be it of the “C-Y” trendline or the A-pulse peak of 1369.23. At this point in time my system won’t allow it as the weekly chart remains on a technical “sell”.

My current S&P500 roadmap is for the current consolidation to result in an upside breakout which runs into mid-March. At that point I believe the bear market will resume.