Another downtrending bar was formed in the cash S&P500 on Wednesday. This price action is in line with the negative technical factors identified on the daily chart in my last posting.
Yesterday I stated that “From a timing perspective I think the bulls need to turn this market back up before the end of the week or the odds will grow that a new bear leg is starting.” This means that we can still have a new low (i.e. lower than yesterday’s low) today and still be within the uptrend that began on March 31 (as long as we hold the March 31 low of course). However; if a new low were to occur again tomorrow (Friday) then the odds are raised significantly that we have just seen a C-pulse high and we will soon be retesting the lows for the year. Note that we found support at the short (red) moving average yesterday. Let’s see if it can hold here.
Yesterday I stated that “From a timing perspective I think the bulls need to turn this market back up before the end of the week or the odds will grow that a new bear leg is starting.” This means that we can still have a new low (i.e. lower than yesterday’s low) today and still be within the uptrend that began on March 31 (as long as we hold the March 31 low of course). However; if a new low were to occur again tomorrow (Friday) then the odds are raised significantly that we have just seen a C-pulse high and we will soon be retesting the lows for the year. Note that we found support at the short (red) moving average yesterday. Let’s see if it can hold here.
I have changed the price pulse labels on the intermediate term chart (shown). This is to better match “Z” pulses (the weakest part of a complete cycle) with momentum lows. This labeling also produces the turning points labeled with the red and green arrows. Currently price would have to fall below the B-pulse bottom (March 31 low) for the model to generate a “sell” signal. Again, this model is a work in progress.
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