Weekly Chart Review for July 12

It was a downtrending price bar on the weekly chart of the cash S&P. We continue the pullback/consolidation since the June 12 high after having a weekly TD Sell Setup perfected on June 1 and a technical “sell” signal (bearish divergence between the RSI and Composite Indicators) on June 19.

Last week’s decline did not add any new information to our technical picture and so we still face the same question: “Will the rally that began in March resume? Or will we have a deeper/longer correction due to the Sell Setup plus technical sell signal? “My answer to that question continues to be “… we will only get confirmation that the uptrend has resumed if we can qualify and confirm a break of the current TD Supply line (downward sloping dashed red line on the price chart).” That line has now been readjusted and stands at 915.71 for the coming week.

Note that we have declined below the TD Demand Line (the upward sloping dashed green line). The break of this line was not “qualified” and raises the odds that a bounce may occur from last weeks low. Such a bounce would be likely if we fail to break cleanly below 869 on Monday and could last a week or two. In this scenario we should watch (besides the TD Supply line) the short term moving average (solid red line at 902 this week) to see if it provides resistance.