Weekly Chart Review for March 30, 2008

The latest weekly chart of the cash S&P500 shows an uptrending price bar with a lower close. Our technical “buy” signal generated just one week ago has been replaced by a “sell” due to a negative reversal pattern in the RSI (see chart). Regardless of this technical development, the market reversed downward after approaching but not hitting our stop at 1362.17. The theoretical short trade generated by the trading system under development in this blog remains short from November 7, 2007 at 1489.55. The stop loss point will be adjusted after the open on Monday.

The next item of note about this week’s price bar is that it is a “Reversal Week”. This occurs when the market makes a new weekly high but closes below the prior week’s close and the current week’s open. Additionally we can note that the high was right at a Fibonacci retracement of the last downward swing from February 29 to March 20. Finally we have the negative reversal in the RSI. Although the RSI was higher last week than on February 22 price was not. This formation points to a price move to at least 1264.54. And so the market; from the weekly chart perspective, seems vulnerable once again.

My roadmap for the coming week: An attempted bounce at the start of the week followed by a renewed move down. More importantly is whether the stop gets hit or not.

Bulls Must Make a Stand Here

The cash S&P500 failed to hold short-term support yesterday and ended up printing another downtrending bar on the daily chart. Based on my timing work it is critical (for the bullish case) that we don't have a print today below yesterday’s low. If we do I think the short-term outlook turns bearish.

Still Watching the Y-Pulse Develop

Monday’s high was a Fibonacci retracement of the x-pulse is now a price fractal high since Tuesday was an inside day and Wednesday downtrending. The stop (Wilder’s Parabolic SAR) on the system’s theoretical short is at 1362.17 and has not yet been hit. The system being developed is for intermediate term position/swing trading; not for day or short-term trading

The cash S&P500 is now just above short-term support at 1334-1335 (Fibonacci and intermediate term moving average). Repeating …. The price pulse model says a likely place for the y-pulse to complete is in the resistance zone between 1369 and 1388.

A Fibonacci High Point?

The week began with an uptrending day on the daily cash S&P500 chart. The stop (Wilder’s Parabolic SAR) on the system’s theoretical short is at 1362.17. I must correct a statement from my last post. The price pulse model never triggers a “buy” in the y-pulse after the x-pulse has made a new low. Therefore the trading model under development can not go long until at least the z-pulse concludes.

Another interesting item to watch today: Yesterday’s high was at a Fibonacci retracement of the x-pulse. It was also at a Fibonacci five trading days from the last low.