Popgun

The cash S&P500 formed an “outside” bar yesterday on the daily chart. This follows last Friday’s “inside” bar and so we now have what EWI’s Jeffrey Kennedy calls a “Popgun” pattern in place. To recap, he says these patterns lead to “swift, tradable moves in price” but once they end they are significantly retraced. Building on this idea I notice that the index has been consolidating over the last few sessions while the RSI has been holding the 40 area (top pane of today’s chart). Are we ready to “pop” upwards? And if so, is the retest of the January 23 low over? Or is the daily RSI just a tease before we “pop” to the downside?

As regular readers know my trading rules will not allow a long trade here. However, if one were to anticipate a “pop” to the upside I would seriously consider watching for a break of the “C-Y” trendline (shown on today’s Intermediate term price pulse chart) to confirm the upside move. Taking such a trade assumes that the Z-pulse; and hence the retest, is complete.

A break to the downside here would heighten my interest in looking for a possible weekly chart “buy” set-up.