With a fourth consecutive up trending week in the cash S&P500 we have reached our next upside weekly chart target of 1012-1028. Why was this a target area? Here are three of the reasons:1) The March 6 to June 12 leg of the rally was 289.44 points (956.23 - 666.79). 50% of that value is 144.72. Add that to the July 10 low of 869.32 and you get 1014.04.
2) 1013 is conjunct 667 on the square of nine.
3) The chart shows (horizontal blue dashed line) the Fibonacci 38.2% retracement (1014.14) of the entire decline from 2007-2009.
But note that we have reached this resistance area without a DeMark signal. TD Combo (dark red) is furthest along and stands at eleven. Even with the aggressive version of TD Combo it takes a minimum of thirteen bars to generate a signal. This means that we have a minimum of two more weeks to wait before we can get a weekly chart sell signal from this tool. This alone implies that even if we were to correct from here we have not reached the end of the rally from March.
So let’s see what TD Retracement has to say about the coming week: Without an open above 1014.14 we shouldn’t expect to close Friday above that level. This implies a flat to down week. An open above 1014.14 implies we close above that level next Friday. This implies another up trending week. So watch Monday’s open closely. However, DeMark also has something to say about the current case where we have penetrated the 38.2% level (last week’s high was 1018.00) but closed below it (we closed at 1010.48). Since we closed higher this week than last we should now expect to eventually reach for (as a minimum) the half-way point between the 38.2 and 50% retracement levels. This value is 1067.79.
How would I interpret the preceding paragraph? Any temporary weakness that occurs over the next week or so should be followed by a push higher. That is, if our expected August correction begins this week we should expect it to be followed by new highs. I have no reason to deviate from my roadmap of July 25 at this time.
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