The cash S&P500 formed an uptrending price bar on its daily chart Friday. But after the weekend events concerning large U.S. Financial Institutions all bets may be off!
Due to the fact that price pulse theory alerted us to the fact that the downtrend had been “regenerated” (see Friday’s post) I did state that the next swing (price pulse) high would be below 1274.42. Friday’s high was at 1255.09. I thought we would get to at least 1260 but it doesn’t look like that will happen now. If the Alpha-pulse (see today’s chart) is in then we are now in the Beta-pulse down.
The first area to watch is the previous Z-pulse low of 1211.54. Below that of course is the July low of 1200.44. In the bigger picture, due to positive technicals, I don’t think the market will crash here. In fact, I think that there is a good chance we will hold 1200. But even if we don’t and end up a bit below that level; I think this wash out will lead to at least a bear market rally into the autumn. I will stick to the thought that before Christmas we will have an important top; above 1313.15 (the August high) but below the May high of 1440. At that point we will start another serious leg down to new lows.
Purists may want to note that the Composite Index (middle pane) is in a negative reversal position which provides technical support for a test of this years low. Friday’s index value was above that of September 8 while price is below (1251.70 compared to 1267.79). The negative reversal target (which is a minimum downside projection) is about 1208.
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