Review of the Monthly Chart

We have now had six positive months in a row after making low in March 2009. As seen yesterday, the new quarterly chart shows this to be a maturing bear market rally. Let’s see what the new monthly chart has to say.

At the end of August the area to watch for a signal that the rally was failing was 970-978. We have held that and have reached for the TD Trend Factor target of 1085. There are three good indicators to watch that would signal a high probability that the rally is complete. The first is the TD Demand Line (upward sloping dashed green line) which now sits at 1021.22. A break below that level would be qualified -- a strong indication that the rally is in trouble. Additionally the TD REI oscillator (top pane) is in overbought territory. A move below the September low of 991.97 would trigger a “sell” signal from this tool and reinforce the break of the Demand Line. Finally, a move below 978.51 would indicate that the upward moving Level 4 Alpha price pulse is complete.

Bottom Line: Although we can’t claim the rally from the March low is complete, the monthly chart shows that the forty point area between 978 and 1020 is the current ground the bulls must hold.

Quick Daily chart note: We broke and qualified the TD Demand Line yesterday. If qualified today it projects to very close to the previously discussed TD Trend Factor target of 1002. Otherwise ... my opinion remains the same: Although certainly not ready to call an end to the bull run from March, I do remain in the bear camp over the near-term. At this point it will take a new high to get me to consider turning bullish. 9-13-9 stop at 1084.05; Parabolic SAR now at 1074.28. The point where I would say the bull run from March is in trouble is currently at 978.51.

To continue this series .... the weekly chart will be presented over the weekend, and back to the daily on Monday.