Although we formed a downtrending price bar on the cash S&P500 Monday the bears failed to move price below the 923.85 level. This has allowed the bulls to “hang on” to the idea that the rally from the March low can extend even further.
The price action on Monday did raise the odds that the 951.69 high set last Thursday was a Level 1 price reaction point and the end of the Delta pulse (see chart). On the lowest (BLUE) level the bears would gain the upper hand with a move below the aforementioned 923.85 level. At the GREEN level the odds are also high that we also just finished a Delta pulse. At this level of the price pulse the trend remains bullish unless the X pulse can break below 879.61.
Bottom Line: Unless the bulls can rally this market (and I think that unlikely) above 950.96 today (new TD Supply Line) I think the bears will gain control of the price action. This would lead to a Level 1 X pulse low below 923.85 over the next few days, a weak bounce up in a Y pulse later this week and then another sell-off in Z into the middle of next week. This type of price action would have to be scrutinized as to whether or not it triggers a technical “sell” signal on the weekly chart, which would open the door to a deep retracement of the rally from 666.79.
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