We'll See Price Below 1261 Before We See It Above 1313

There is not much new to report this morning as the cash S&P500 struggles a bit higher. Price action was lackluster on Thursday with lower volume but it was an uptrending day.

Yesterday’s high was at a Fibonacci cluster (see chart) and is overhead resistance again today. Above that the next band of resistance is at 1285-1288 and then not until 1300.

I wrote back on July 28 and then again August 11, “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 am now beginning to lean towards the idea that the rally has already seen at least an interim top and that the current bounce from this Wednesdays low will be over by the end of August without being able to make a new high (go above 1313).

At that point we will see a decline that drops below 1261 by early September. At this point I don’t think we are in danger of going below the July 15 low because the weekly chart hints that the larger rally from mid-July is still not over.

The Wilder Directional Movement System continues to show price in a trading range (non-trending) and I expect that in a couple of weeks prices will be close to where they are now. The Parabolic SAR stands at 1304.68. My still under-development trading system is short from 1276.84. A move today above the SAR would stop me out (and not go long since the D-wave trend is still down).

Generally Range Bound Over the Next Couple of Weeks?

The cash S&P500 formed a downtrending bar with a higher close and higher volume on the daily chart Wednesday. We made low at the Dynamic Gann Line (down sloping purple line) at the bottom of our identified support range and then rallied to finish the day higher.

Although a rally appears to have started here I am not hopeful that the bulls will be able to move prices back above 1313 on this bounce. Instead, I expect a choppy upwards move over the next week that fails to make a new high followed by a decline that drops below yesterday’s low by early September. The Wilder Directional Movement System continues to show price in a trading range (non-trending) and I expect that in a couple of weeks prices will be close to where they are now.

The Parabolic SAR stands at 1307.46. My still under-development trading system is short from 1276.84. A move today above the SAR would switch me to long.

Pullback Continues

The pullback in the cash S&P500 continued with another downtrending day yesterday. Volume increased a bit on the decline as prices fell from the open before reaching the 1262-1266 support area right before the lunch hour. We then moved sideways the rest of the session as support held. The price action now marks Friday’s high as a price fractal and so the Resistance line on the chart is now much steeper and sits at 1293.73 today.

Today will be an important day. A rally from the off that leaves yesterday’s low in place gives the bulls at least a fighting chance to attack the 1313 level again. Any move under yesterday’s low and; although the immediate decline might end very quickly, I think we will fail to move above 1313 on the next rally. Today’s chart shows support right under the market at 1261-1265 and then at 1249-1250.

The Wilder Directional Movement System is now out of the market and indicates that price is now in a trading range (non-trending). The Parabolic SAR stands at 1310.41. My still under-development trading system is short from 1276.84. A move today above the SAR would switch me to long.

Pullback Underway

The bulls met their match yesterday as the cash S&P500 formed a downtrending day. This move down was sufficient to cause the August 11 high of 1313.15 to become a CIT (Change-In-Trend). One bit of information that points to a pullback rather than a new bull leg is that volume decreased yesterday. Additionally the weekly chart is on a "buy" signal and the 1313 high was only minor resistance on that chart.

Of the two short-term scenarios laid out yesterday the market has chosen the bearish alternative. In this situation I see the immediate decline ending very quickly and holding above the July 28 low of 1234. Today’s chart shows support right under the market at 1274 and then at 1262-1266 and then 1249-1250. We should see a bounce higher beginning over the next day or so that again tries to surpass 1313. It will be the character of this bounce that tells us much about how weak the market is or is not becoming here.

The Wilder Directional Movement System remains long from 1297.85 but will go neutral on any move today below yesterdays low. Meanwhile the Parabolic SAR was breached and is now above the market at 1312.38. The price drop yesterday put my under-development trading system in a short position from 1276.84. A move today above the Resistance line at 1309.06 and SAR would switch me to long.

Can the Bulls Break 1313 on This Thrust Up?

The cash S&P500 formed an uptrending day on Friday and there is not much change in our overall viewpoint at this time. We made low Friday in the former resistance band between 1289 and 1293 as this area is now support. High for the day was made above weak resistance at 1298 and that is where we closed, sitting right on the Dynamic Gann Line that provided resistance Thursday.

The Wilder Directional Movement System remains long from 1297.85 while the Parabolic SAR remains at 1276.84. A price drop below that SAR level (which would also be below the current support line at 1287.61) would put my under-development trading system in a short position.

I am now not so confident that the market will be able to reach last Monday’s high of 1313 on this rally attempt. There is a band of resistance from 1304-1307 and then the down sloping resistance line (dark red) is right above that. There is then resistance at the old high (1313-1315). If the bulls can rally this market past 1315 then the first target is at 1319-1322.

As always, there are two scenarios here. The bullish case is supported by the technicals as both the daily and weekly charts remain on “buy” signals as previously discussed. In this case the market will push above 1313 early this week, make a shallow pullback and then continue to rally (above 1313) into late August. The bearish view is not horribly negative over the short term. It has the market failing here and declining over the next few sessions to below 1274 but holding above the July 28 low of 1234. We then get a quick bounce that again fails at 1313 in later August and is followed by a sharper decline into early September.