The latest price bar on the cash S&P500 weekly chart is downtrending. After briefly popping upwards out of the contracting pattern that developed during February the market has now fallen towards the January low.Back on February 8 I wrote: “Now I want to see if the weekly chart can generate a technical “buy” signal. For us to get in a position to do that this week we would need the S&P to close below 1325.19 …” Well finally we have closed below the 1325.19 level. The S&P is now at its lowest closing value since this decline began last October. Meanwhile the RSI indicator (top pane) is not at a new low for the move. This depicts potential bullish divergence. The key word in that short sentence being ‘potential’. For a technical “buy” signal to be triggered on this time frame we would need to see price and the indicator both turn up with the bullish divergence in place. It is something I will be watching for during the coming days but for now the trading system under development is still short.
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