It was an up trending week on the cash S&P500, but not the type of up trending price bar that the bulls are proud of. After reaching the Long moving average (green line) and the TD Trend Factor target at 1079 the market rolled over and finished near its lows. The decline can be called a reaction to the recently perfected TD Sell Setup.Another technical reason in support of a downside reaction is the bearish divergence between the RSI/Composite Index and RSI/Derivative Oscillator. As an aside, please note that the RSI was threatening to break upward through the range typically associated with bear market resistance. It couldn’t quite do it. Combining the position of the RSI with a perfected TD Sell Setup tells us that the odds are high that the first pullback since June/July is underway.
Bottom Line: The bulls were on the verge of confirming and extending their grip on this market but it appears that the bearish camp has used the daily 9-13-9 “sell” opportunity to their benefit. Is that enough to turn the larger bullish tide? Let’s continue to watch the daily chart closely this coming week. At this point I think that longer-term investors should not be buying equities; but at the same time it is a bit early to abandon ship.
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