Once Again the Bulls Must Prove Their Case

The cash S&P500 formed an uptrending day on Thursday although volume continued to shrink. Over the short run we may have begun another push higher.

We made low yesterday just under the short (red) moving average and at the current support line (bright green). We then rallied and made high for the day very near the Dynamic Gann Line at 1298 before finishing on top of the resistance band between 1289 and 1293.

The Wilder Directional Movement System remains long from 1297.85 while the Parabolic SAR is now at 1276.84. A price drop below that level (which would also be below the current support line at 1280.44) is not expected but would put my under-development trading system in a short position.

I think the market will now try and reach last Monday’s high of 1313; but it will not be easy. After weak resistance at 1298 there are two stronger bands of resistance: 13094-1307 and 1309-11. If the bulls can rally this market past 1313 then the target is at 1319-1326. In conclusion, although I still think the trend is up I am becoming much more “nervous” about the markets ability to sustain this choppy drive up.

Held at Support Yesterday

The cash S&P500 formed another downtrending day on Wednesday, this time on higher volume. Short-term, the question now is whether the decline from Monday’s high is over.

We made low yesterday in the support area identified between 1273-1276 (which included the short moving average) and then prices firmed. Let’s see if the bulls can use this support area as a springboard to bounce prices higher.

The Wilder Directional Movement System is long from 1297.85 while the Parabolic SAR is at 1274.86. A price drop below that level (which would also be below the current support line at 1276.77) is not expected but would put my under-development trading system in a short position.

At this point I personally believe the trend remains up from the July 15 low. If a new bounce has started then we first have to clear old overhead resistance between 1289 and 1293. After that there is weak resistance at 1298 and better resistance from 1304-1307. As you can see the bulls are going to have to work hard to get above Monday’s high. If they do then the first target is at 1319-1326.

From July 15 and Still Continuing: Higher Highs and Higher Lows

The cash S&P500 formed a downtrending day on lower volume Tuesday. What I believe will be a short, shallow pullback continues from Monday’s high.

Today’s chart shows yesterday’s low at a Fibonacci 23.6% retracement (dashed horizontal line) of the move from the July 15 low. If the decline continues past this natural support level then the next area of support is 1273-1276. Please note that the August 8 low of 1262.11 is now a price fractal so that the current support line (bright green) has steepened.

The Wilder Directional Movement System is long from 1297.85 while the Parabolic SAR is at 1269.26. A price drop below that level (which would also be below the current support line at 1273.11) is not expected but would put my under-development trading system in a short position.

Once the uptrend resumes the first target is at 1320-1322 and I would not be surprised to see that level by early next week. A stronger band of resistance can be found from 1343-1351 but I am beginning to think we will not hit that without an intervening correction first.

Rally Continues

The cash S&P500 formed an uptrending day on higher volume Monday. The rally from the July 15 low continues and there is not much new to add.

As today’s chart shows, yesterday’s high was at the Dynamic Gann Line (light blue line) and we closed right at the weekly moving average (not shown). A short, shallow pullback may have begun from yesterday's high. The next area where we could see some resistance once the uptrend resumes is from 1318-1322. A stronger band of resistance can be found from 1343-1351.

The Wilder Directional Movement System is now long from 1297.85 while the Parabolic SAR is at 1262.11. A price drop below that level (which would include the current support line in bright green at 1263.15) today is not expected but would put my under-development trading system in a short position.

Bulls Did What They Had To!

The cash S&P500 formed an outside day on Monday. After slipping slightly under Thursday’s low the bulls were able to do what they had to do to keep this rally alive: move price immediately back above 1291.67 and we are now at the top of the overhead resistance band of 1289-1296 (see chart).

Should the rally continue, we see that; after minor resistance at 1307, there is a stronger band of resistance from 1315-1322. This area includes the short moving average from the weekly chart.

We had a bullish crossing of the DI lines yesterday in the Directional Movement System is concerned. Wilder says that the point to go “Long” is now yesterdays high of 1297.85. Note that this “system” is currently flat. The Wilder stop (Parabolic SAR) on a previous long position is now at 1260.89. A price drop below 1260.53 (the current support line in bright green) today would put my under-development trading system in a short position.

As I wrote back on July 28, “As far as a general roadmap goes I am looking for the recently begun rally from July 15 to last at least until Labor Day (early September) but I do not expect 1440 to be broken.” I still believe this to be the case. Bottom line: The short-term trend is still up: bear market rally continues.