In the first week after a completed TD Combo #13 the weekly chart of the cash S&P500 has printed a down trending price bar. The price action last week broke and qualified the TD Demand line which gives us a downside price objective of 972.14 *if* the break is confirmed this coming week. An open next Tuesday above 1014.90 is one way we can get fail to confirm. The other would be to not make a new low. In either of these two cases the momentum would switch to the bull side, and we would then have to watch to see if we break 1029.13 (TD Supply Line). If we do we will have qualified the supply line and odds will then be quite high that a new price high is in the cards.Can we reconcile a move to new highs even though we recently completed a TD Combo “sell“ signal? Yes. First off, recall that the risk level associated with that signal is at 1062.74 (shown as a bright red horizontal line on the chart). The “sell” signal remains in effect unless we get a qualified and confirmed break of this level. With that in mind it is interesting to see that if next week prints a TD Setup bar #9 we can also lose our Combo signal if the market exceeds 1063.01. Notice how the two techniques seem to reinforce each other by being so close. My point here is that as long as we don’t exceed 1063.01 next week we must still be wary of an impending trend change from bullish to bearish.
Bottom Line: The weekly chart took on a bearish tone when we broke 1014.91 last week. However, I did not expect the mid-August low of 978 to be broken and I still don‘t without a new high that is recorded on or after September 21. However, if the bulls want to ensure that the rally has continued staying power they need to break 1063.01 before “time” runs out. After the equinox I would be very careful; particularly since this past week just produced another RSI-Composite index bearish divergence.
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