The rally attempt is on, but it certainly isn’t anything glorious. The cash S&P500 index did paint an uptrending price bar yesterday but we spent most of the session within the range of Wednesday’s bar.
The RSI (top pane of today’s chart) is still holding in the area where bull markets find support but there is still not bullish divergence with the Composite Indicator (see yesterday’s post). The Composite actually fell yesterday even with the higher price close.
What yesterday’s meek rally attempt did do is readjust the supply and demand balance as measured by the Tom DeMark lines. The Demand Line (dashed green line) is now almost horizontal and sits at 870.66. A qualified and confirmed break of this level would point to a much deeper retracement of the March – June rally.
Bottom Line: I remain bearish on equities. Overhead resistance lies at both the short (solid red) and intermediate (solid blue) moving averages. Downside targets (support) are 861-865 and then again at 845-853.
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