Updating the Indicators; A P.S. on Gold

In terms of absolute price movement it was a much quieter day on Wednesday as the cash S&P500 formed a down trending price bar.

If my roadmap is to hold (I.e. we get a new high on or after the equinox) I think we need to hold the 978 level as this is a key Level 2 Price Pulse level. Can the bullish camp hold this level? Let’s update the “encouraging” potentially bullish indications I listed in yesterday’s post.

1) The RSI is in a downtrend and below its level of August 17th while price is still above its August 17th level. Still true and still a possible positive reversal indication.
2) The Composite index is below its level of August 17th while the RSI is not. This is no longer the case. The composite index fell quickly yesterday and at best is now in a position to also form a possible positive reversal.
3) The REI was above .40 for six sessions from Aug. 24 to 31. This is mildly overbought and has preceded the current weakness. The oscillator was just recently below -.40 and was mildly oversold. A TD POQ buy signal is pending but first requires an up close day. As an aside …. There seems to be an error in Jason Perl’s book on this indicator. For a buy signal he says there must be a lower close than the previous price bar. I think (from reading other material) that is backwards. Comments on this welcomed and appreciated!
4) Fibonacci retracement of the most recent price swing (up from the August 17 low as defined by the swing chart). The market opened above the 38.2% level and then traded through it, the 50% and 61.8% retracement levels. This is often a sign of near-term price exhaustion. Still possible; particularly since one can argue that the “pace” of selling diminished yesterday.

The four points above are still viable if less encouraging than yesterday. Again, these are only indicators of a possible upside reversal. At the lowest level (Level 1) the downward moving “x” pulse is about to end. At Level 2 we are now entering the time period where we should look for the “x” pulse there to end. As a reader points out in a comment yesterday, TD Diff indicates that yesterday stands a better chance of being a short-term low than Tuesday’s low did. It looks like I need to explore using TD Diff in conjunction with Level 1 price pulses.

P.S. It looks like the World Gold Index is trying to form a TD Sequential "sell" countdown bar #13 on its weekly chart. More on this at the weekend if it develops.