The cash S&P500 opened above the TD “Supply” line shown on the posted chart (the downward sloping red line) last Friday. On Friday I stated that “If the cash S&P500 can open above that line today (852.55) expect the bulls to retest the high.” That retest is on! And, as explained yesterday, whether we can break above 875.23 is crucial. Break above that level and the bulls may go on a stampede. Will we? My best guess is no but it is just an opinion. The price action today should dictate trading actions.
The current upward moving Delta pulse (from Tuesday’s low of 826.83) should complete by Tuesday and we are in the timing window now. There are a multitude of Gann targets and Fibonacci targets on the daily chart that lead me to stick with the bearish view here:
1) 876 (our high so far) is 315 (+360) degrees on the Gann wheel from 667 (the March low).
2) 877 is Sesquiquadrate March 6.
3) 878 is square April 17.
Those three Gann targets support the notion that we peaked on April 17. The next three items argue that we will not break the weekly Supply line of 875.23:
4) 875 is square April 27.
5) Fibonacci cluster from 871.5 to 873
6) Fibonacci cluster from 875 to 876.
However, perhaps the best indication that the bulls are failing here would be the negation of the TD Supply line break of last Friday on the daily chart. This would occur if we fail to go above Friday’s high today.
Bottom Line: We should let the price action dictate our stance here. I still favor the bearish view that ultimately looks for a retracement of the March 6 to April 17 rally that goes below 780. However that view will be put in jeopardy with a move above 875.23
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