Although price formed an up trending bar on the cash S&P500 weekly chart we did close lower. This price action registers the first bearish RSI/Price divergence since the bull run began in March. Furthermore, the RSI (top pane) has failed to push through the area normally reserved for bear markets (shown by solid horizontal lines). That is, the RSI (along with price) has rallied into an area where resistance should show up if the market is still in bear mode (which it started in late 2007). Well, we have hit that resistance and now have an outright bearish RSI “sell” signal.The question here, if one agrees that the market is topping, is how far down will we now go? At this point I note that there are no TD signals on the weekly chart. This would infer that any decline would hold above previous TDST support at 875. So maybe I am not in the “gloom and doom” camp right now, but with other momentum indicators failing and the Elliott Wave count showing a possible Zigzag (from the March low) completing, I think the new RSI divergence clearly shows that the risk of a reversal is too high to be long now.
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