Odds Now Favor Pullback

The cash S&P500 printed an “outside” day on Thursday. After exceeding Wednesday's high within the first 15 minutes of trading we went on to make a lower low than Wednesday. This lower low confirmed Wednesday’s break of the TD Demand Line and negates the previously very bullish 1332 price objective. Now we not only have a technical “sell” signal (bearish divergence between the RSI and Composite indicators) in place, but the aggressive version of TD Combo hit bar number 13 yesterday (chart shows the regular version which remains on day 12).

And so the evidence now favors the view that a pullback is underway. Is it the Level 3 Beta Price Pulse pullback (see my post of July 25th) that I have been watching for? Under my current roadmap the Beta low will be in by September 2. Definitive proof that the pullback is underway would still be provided by a break of the July 29 low of 968.65. Failing that we would need to see yesterday’s high hold through August 21. Although not definitive, a failure to break yesterday’s high by next Tuesday would strongly favor the view that the anticipated August pullback is underway.

Conclusion: With our bullish TD Supply Line projection negated, a technical “sell” signal in place and an aggressive TD Combo sequence completed the odds now favor a pullback. An initial wag at a downside target would be somewhere between 922 and 955. I still expect new highs before the Autumnal Equinox.