Watching the Price Pulses

The cash S&P500 formed an uptrending price bar on Thursday. We are watching the Level 1 Y pulse form and, even though we closed lower yesterday, we still can’t say it is complete. More importantly we know that the Level 2 Y and Level 3 Alpha pulses are close to completion. The completion of these pulses will be a good signal to protect rally profits. At this point we will only know with certainty that the Level 3 Alpha is complete on a break below 847.12. An earlier warning *may* be given by the break of the Level 2 Beta – X trendline which is shown on the chart and stands at 850.34 today.

On Wednesday we broke and qualified the TD Supply line at 869.50. That break had an 892.64 target. Also remember that there was a TD Combo sell signal with a stop loss level at 890.39. Tom DeMark says to give these signals 12 trading bars in which to work. So far we have had nine.

Over the coming days I will use this space to develop a trading plan that trades the Level 3 price swings. This means that the first trade will be a short trade.