A very interesting session in the cash S&P500. The index did nothing until the Fed announcement when it rallied. After making a new rally high it then turned down and finished clearly lower. When all was said and down it was an outside bar with a lower close. There are now quite a few technical reasons to be bearish; at least on the short-term.1. We are currently working off of a complete TD Sequential Reinforcement (otherwise known as a 9-13-9 “sell” pattern). Now that we have had a price “flip” the odds are much improved that a decline has begun. The stop loss level with this signal is at 1084.05.
2. The RSI has formed bearish divergence with price.
3. Although confirmed and qualified through the TD Supply line, the index still failed and reversed to qualify the TD Demand Line.
4. The Level 1 chart is now forming a “z” pulse which has broken the beta - x trendline. This is a sign of weakness. The Level 2 chart will turn bearish on a break below 1057.46.
5. The latest closing high, 1074, is opposite 666 on the Gann wheel. Our 1080 high is Three turns of a circle up form zero.
Of course the question now is how significant of a decline is at hand, and this is the harder question. What can be said is that a move below yesterday’s low will qualify the TD Demand Line break and targets 1052.74. As this is where the short moving average is it should be used as our first support level. Failure to hold this level opens the door to challenge the TD Trend Factor target at 1002. The Weekly short moving average will be in that area as well next week.
Bottom Line: I am certainly not yet ready to call an end to the bull run from March but I am certainly in the bear camp for the very short-term. 9-13-9 stop at 1084.05. Let’s see what happens at the short moving average. One step at a time. The point where I would say the bull run from March is in trouble is currently at 978.51.
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