The cash S&P500 formed an outside price bar (with a higher close) on its daily chart yesterday. After testing, and holding, the 1211-1225 area one more time I think we are continuing to build a base here from which a rally will spring. Before Christmas I think we will have an important top; above 1313.15 (the August high) but below the May high of 1440.
I believe I have made some progress in my understanding of price pulse theory. Some readers may remember posts about this subject and they can be found in the archive. Today’s chart shows that yesterday’s low was assumed to be the end of a “z-pulse”. This assumption was made because we have just had a technical “buy” signal. However, price pulse theory tells us that when we went below the x-pulse low of 1217.23 yesterday the downtrend was “regenerated”. Being in a downtrend with a technical “buy” signal is a contradiction. The way to resolve this is to have the next price pulse high (the alpha pulse) complete below the Y-pulse high of 1274.42. Where would that high be?
Our chart also contains a Fibonacci ratio analysis. Resistance levels are at yesterday’s high and then at 1260 and 1271. Intraday traders should watch those levels.
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