At a Tricky, Important Juncture

With the cash S&P500 surpassing the 1006-1007 resistance area late yesterday we must be alert to the resumption of the bull run -- even though the correction from August 7 resulted in only the mildest of pullbacks.

We hit the TD Demand Line yesterday (down sloping dashed red line) and it will be qualified on an open above 1005.85 (we closed at 1007.37). If later confirmed the break of that line projects to 1038.05 -- the rally would be back on! However; what makes this very tricky is that any move above 1013.14 today would put the market in a position where a TD Sequential 13 could be hit on the daily chart early next week. At that point two distinctly differing results are possible: the rally is renewed and we continue to rally to at least the Equinox without returning to 978.51 (August 17 low) OR we fall very sharply next week and then rally.

Bottom Line: A breakout and possible violent rally should be assumed on a break above 1013.14 today -- but tight trailing stops should be employed in case this is just a head fake before a sharp sell-off next week. ‘Gotta call ‘em like I sees ‘em!