The cash S&P500 formed an “outside” price bar yesterday while closing much higher. Although it was bar #9 in a possible TD Buy Setup we have not yet “perfected” that pattern. To do so still requires a move below 888.86.
The rally yesterday did trigger a technical “buy” signal (bullish divergence between RSI and Composite Index) and exceeded the TD Supply Line. If the break of the supply line is confirmed today (need a higher high) it projects to 937.17. TD Resistance is now at 946.21 and the TD Trend Factor target at 944.86. These three numbers give a target zone of 937 – 946.
We closed at resistance from the short moving average (red line) and the 50% Fib retracement yesterday. I think that we need to move above 927.09 to “activate” the target zone mentioned above. If we can’t break 927.09 over the next two sessions I think we will go back down to perfect the pending TD Buy Setup.
Bottom Line: I am bearish on the equities due to the recent sell signal on the weekly chart and lack of perfection on the daily chart’s DeMark Buy Setup.
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