Waiting Mode

The cash S&P500 formed a downtrending price bar on Thursday. We still haven’t broken the “C-Y” trendline on the Intermediate price pulse chart and so we continue to wait. The daily price chart has been consolidating for close to a month now.

Will we break the C-Y Trendline?

The cash S&P500 formed had two uptrending days in a row as the market has advanced since the “Popgun” pattern formed at the close on Monday.

As today’s Intermediate term price pulse chart shows, the market is approaching the “C-Y” trendline. According to the price pulse theory, a break of that trendline would confirm that the Z-pulse; and hence the retest of the January 23 low, is complete.

If we do break the trendline we will then have a basis to look at how far and long the up move may travel.

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.

As we start the week ...

The cash S&P500 formed an “inside” bar last Friday on the daily chart. In most situations an inside bar does not reveal much information about the market and this is one of those times.

The two items I will be watching for this week are, 1) The current retest of the January 23 low, and 2) whether we close the week below 1325.19 in order to get into position for the weekly chart to generate a possible technical “buy” signal.

Did we get a Weekly "Buy" Signal?

The latest weekly bar on the cash S&P500 can be classified as “downtrending” and the low the week of January 25 is now defined as a price fractal. As you know one of the key items I have been watching for is whether or not this chart would generate a technical “buy” signal on the retest of the January 23 low. To even get into a position for the weekly chart to do that this week required an S&P close below 1325.19 on Friday. That didn’t happen.

Within the constraints of my swing trading system I am now forced to sit in cash for at least another week. In this system there are only two options: equities or cash.