Watching Like a Hawk

After five straight days of closing higher the cash S&P500 closed lower last Friday -- but it was still an up trending day that contained a new high for the rally. On a very short time-frame the key support level is at1028.04, the start of the latest Level 1 Alpha pulse. A break below that level would mean that a new pullback is underway; a pullback that should hold the September 2 low of 991.97.

As mentioned yesterday in the weekly review, I am watching the overhead 1062.74 and 1063.01 levels to see if they end up being broken, qualified and confirmed (on the weekly chart). While this plays out I am keeping an eye on two items on the daily chart . First, I want to see if we can create a 9-13-9 “sell” pattern. We are on bar #4 of that last 9 now. To get bar #5 today we must close above 1025.39. Secondly, I want to see the reaction to the divergence between price and the RSI. Although we made a new closing high last Thursday the RSI did not. Continued weakness in this indicator has me worried; and the futures are down more than 10 points very early this morning.

Bottom Line: Still bullish until after September 21 (Autumnal Equinox) at which time I will re-evaluate. Watching closely to see whether 1063.01 can be broken.

P.S. on the World Gold Index. We now have a perfected 9 bar TD Sell Setup on the daily and are at TD Sequential countdown bar #12. In order to complete a sequential countdown it is imperative for the market to qualify and confirm the break above 1010.24. Meanwhile, the weekly chart shows a new closing high without a new high in the RSI indicator. A turn down next week could spell trouble for the bulls. But, until we get further proof to support the bearish case I still have no incentive to be outright negative on this market.