Wednesday saw the cash S&P500 form an “inside” price bar that moved from one (short; red) Gann moving average to the other (long; green). This price action makes it very likely (although not a certainty) that the X pulse from the 845.61 (April 2) high is over and that we are now in an upward moving Y pulse.
The ability to hold above the red moving average shows that the bulls are still kicking. Note that the bounce yesterday was also at a Fibonacci confluence zone (horizontal dashed lines). The next lower level of such support is at 796. The bulls may be still kicking; but are they getting tired? Are the bears about to grab the upper hand?
Two things to watch today: 1) the price action at the long moving average. Failure to move through it cleanly leans bearish. 2) The BETA – X trendline. If we are in a Y pulse our “Price Pulse (PP) Theory” will issue a sell signal if Y completes and we fall down through that trendline. Of course, the key here is whether X has really completed.
In summary bears should act on a move below 814.53. Anyone lucky enough to have good profits from the swing up off the March 6 low might want to book profits on a move below 814.53 also.
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