To a certain degree Thursday’s price action was the opposite of Wednesday’s. After starting lower prices ended near the highs of the session but ended up being classified as a downtrending day. I think it is fair to say that the past couple of sessions have been a consolidation and not much else. What we do know is that Tuesday’s low of 826.83 is now considered a fractal and Level 1 Price Reaction Point. This confirms that it is the end of the Beta pulse and that Delta is underway. As Delta is the strongest upward pulse we must respect the ability of the bulls to hold up prices here.
A good way to measure bullish capability is via the price relationship with the new TD “Supply” line shown on today’s chart (the downward sloping red line). If the cash S&P500 can open above that line today (852.55) expect the bulls to retest the high. Otherwise odds are that the bears will be unable to prevent a trip back towards the 825-827 area; our immediate downside target.On the other side of the coin, a move below the TD “Demand” line (the upward sloping green line) at 830.52 would target 779.26.
Bottom Line: Risk/ reward favors the bears here. Ultimately looking for a retracement of the March 6 to April 17 rally that goes below 780 but lets watch the supply and demand action for short-term market direction. I will update during the day via twitter if key lines are broken.
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