Working Through Computer Issues

After two days of fighting computer problems I am ready to fight the technical analysis battle once again. In Sunday’s post I noted 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.” After dipping into negative territory briefly Monday morning we began to rally sharply and never threatened 869. I also stated that “In this scenario we should watch to see if the short term moving average (solid red line at 902 this week) provides resistance.” We have now reached that level.

On the daily chart there was a bullish divergence between price and the RSI (top pane in today’s chart) indicator that was cemented in place on Monday’s rally. This occurred as the RSI held above the critical 38 level; the area where bull markets typically find support. With the daily chart showing strength we are again faced by the question: “Has the rally that began in March resumed? Or is the action over the past few days just a bounce before a deeper/longer correction?” My answer to that question continues to be that we will only get confirmation that the uptrend has resumed if we can qualify and confirm a break of the current Weekly TD Supply line. That line stands at 915.71.

We have now hit daily chart resistance at the short (solid red) moving average (902). Let’s see what happens here - pullback or a move to the intermediate (solid blue) moving average (916). The test of the weekly TD Supply line is on!