Now Testing the 1313 High

There can be no denying that the cash S&P500 had a very bullish day yesterday as the large uptrending price bar was accompanied by increasing volume. If my short-term roadmap is to be followed we must see a reversal before the August 11 high of 1313 is broken.

“I can’t see us going much above 1293 and I think we will see a decline that drops below 1261 by early September. In fact, we are now starting to stare at a re-test of the mid-July low; which I think will hold (at least on this retest). Bottom Line: I am short-term bearish.”

Yesterday’s price action must lead to modification of the above paragraph. “…going much above 1293 …” is now replaced by “…. going above 1313.15 …” Finally, “… a re-test of the mid-July low” is better phrased as “… a re-test of the secondary late-July low of 1234”.

Today’s chart shows resistance from 1304-1307 and then again with the old high at 1312-1315. The Wilder Directional Movement System continues to show price in a trading range (non-trending). The Parabolic SAR was broken yesterday at 1295.14 and stopping out the under-development trading system with a loss (short from 1276.84).

Waiting ....

The cash S&P500 formed an uptrending price bar on the daily chart Wednesday on lower volume. There is not much new to talk about this morning – focus remains on the same issues discussed over the past few days and I will stick to what I said “I can’t see us going much above 1293 and I think we will see a decline that drops below 1261 by early September. In fact, we are now starting to stare at a re-test of the mid-July low; which I think will hold (at least on this retest). Bottom Line: I am short-term bearish.”

The Wilder Directional Movement System continues to show price in a trading range (non-trending). The Parabolic SAR now stands at 1295.14. The under-development trading system (currently short from 1276.84) will be stopped out on a move today above the SAR.

The Fight Over the Monthly Chart Continues

The cash S&P500 formed a downtrending price bar on the daily chart Tuesday although we closed higher. Once again volume shrunk.

Updating the issues discussed yesterday: The short moving average on the weekly chart has acted as strong overhead resistance during the past few weeks and now sits at 1288.95. Also, yesterday’s slight price rise (on a closing basis) was not quite enough to put a bullish spin on the monthly chart. If the bulls want to end August with a technical “buy” signal on the monthly chart they have to do better here -- and this is what the fight will be about over the next three trading sessions.

With a low yesterday of 1263.21 the bulls were able to hold 1261. It is interesting that the short-term battle to hold 1261 seems to be connected to the longer-term fight over the monthly chart. 1261 is important. However; even if they can hold that mark again today I don’t think it will amount to much of a rally here. I can’t see us going much above 1293 and I think we will see a decline that drops below 1261 by early September. In fact, we are now starting to stare at a re-test of the mid-July low; which I think will hold (at least on this retest). Bottom Line: I am short-term bearish.

The Wilder Directional Movement System continues to show price in a trading range (non-trending). The Parabolic SAR now stands at 1297.31. The under-development trading system (currently short from 1276.84) will be stopped out on a move today above the SAR.

Fighting for the Monthly Chart

After rallying for two days on decreasing volume the bears took control of the cash S&P500 yesterday. A strong downtrending day has taken prices to just above last Wednesday’s low.

There are two items of major interest to me this morning. One; that yesterdays open was right at the short moving average on the weekly chart (shown at left). This moving average has acted as strong overhead resistance during the past few weeks (see chart). Two, yesterdays price decline has wiped out the potential technical “buy” signal that was building on the monthly chart (see my August 1 post). Of course we still have four more trading days to go – we’ll see how it ends up. In any event, these two facts cast more of a bearish tone to things as we head towards the traditional end of summer here in the States (Labor Day).

The short-term question now is whether the bulls can hold 1261. Even if they can I don’t think it will amount to much as far as price goes. In fact; I think what the bulls really want to do this week is turn the just-mentioned monthly chart positive. That is where the real battle lies right now. They know that (at least the initial) bounce up from the July 15th low of 1200.41 is over. But can they save the monthly chart? I think we will see a decline that drops below 1261 by early September. In fact, we are now starting to stare at a re-test of the mid-July low; which I think will hold (at least on this retest).

The Wilder Directional Movement System continues to show price in a trading range (non-trending). The Parabolic SAR now stands at 1299.62. The under-development trading system (currently short from 1276.84) will be stopped out on a move today above the SAR.

We are Retesting the August High Now

Although we ended last week strong on price action (the cash S&P500 formed an uptrending day opening on the low and closing just under the high) I was a bit concerned by still lower volume (compared to the previous two sessions). Price Up and Volume Down is not a very bullish combination.

As a new week begins this is my current conceptual roadmap: The bounce up from the August 20th low of 1261.16 will be over by the end of this week (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. More specifically, there are two ways I see us failing to hit 1313 this week. Scenario One: A short decline starts today that holds 1261 and is followed by a bounce at the end of the week. Scenario Two: We rally above 1302 quickly to start the week and then begin to fall sharply. It will be interesting to see how it plays out.

The Wilder Directional Movement System continues to show price in a trading range (non-trending). The Parabolic SAR now stands at 1302.07 and the resistance line has just been broken. As such, my under-development trading system (currently short from 1276.84) will be stopped out on a move today above the SAR.