Has the Level 1 Alpha Pulse Peaked?

After starting strongly and peaking at 1036 (Demand Line break projection was 1038) the cash S&P500 moved lower the rest of the day and finished slightly lower. However the price action is still classified as an up trending price bar on the chart.

Yesterday’s reversal is a strong indication that the upward moving Level 1 alpha price pulse mentioned yesterday is complete and that the downward moving beta pulse has begun. With Beta comes the danger of a sharp decline that quickly puts the market back below 978. I think the odds of this are small but worth noting (a good reason for tight trailing stops). Adding to this risk was another RSI “sell” signal (see top pane of chart) at the close yesterday. The new closing high on Friday was only accompanied by yet another lower RSI high.

My initial downside target would be the short moving average at about 1005; where the Fib retracement also lies. Finally, it is also interesting to note how close we are getting to a completed TD Sequential Countdown. More on that in a later post.

Bottom Line: Weakness here (even a decline below 978) would be followed by a move to new highs as the overall rally continues (in time) to at least the Equinox.