Goal? Try and Identify When the C-Pulse is Complete

The cash S&P500 hesitated on Thursday as it formed an “inside” day. This price action provided little new information. Note that once again support was provided by the short moving average.

What can today’s action reveal? A low today less than Wednesday’s will substantially increase the odds that the C-pulse high is in. Failure to go below Wednesday’s low means that the bulls have a chance to prove their mettle – but need to rally us above Monday’s high. In either event the model’s key points for now are 1312.81 and 1396.02. I still think we will see the former before the latter.

There may be another technical use for the price pulse model. The signal points (red and green arrows) may identify the completion of Elliott Waves; which are drawn in purple on today’s chart. Intriguing is that the price pulses may also indicate which waves are impulsive and which are corrective. For example, the waves from Oct. 11 to Nov. 26 and Dec. 11 to 1/23 are composed of five price pulses in an “impulsive” fashion. All the other waves (not counting the current up wave which can not yet be claimed as complete) are composed of three pulses indicative of corrections. Even with this information it is not easy to count waves.

What is the Elliott sequence of these five waves? There are three choices. Is it 1-2-3-a-b? Perhaps a-b-c-x-a describes it best? Or maybe it’s a-b-c-a-b? In future postings I will explore the possibilities further.

A Price Pulse Model Revision

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.

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.

Daily Chart Shows Signs of Weakness

Yesterday the cash S&P500 formed a downtrending bar after hitting Fibonacci resistance at the top of the previously defined resistance zone. There was also resistance provided by the long term (green) moving average and a technical “sell” signal was generated as the Composite Index diverged from the RSI.

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.

In the Resistance Zone!

Short and simple today. The cash S&P500 is now delicately poised in the resistance zone that has been identified previously. I will have to reevaluate my intermediate term bearish stance if the high of February 1, 2008 (1396.02) is broken.