Yesterday I presented a review of the weekly chart that indicated we had just made a qualified break of the TD Demand Line. If confirmed this week (with a move below 1033.38) it projects to 987.51, which is below the critical value of 1019.95. The break of the daily TD Demand Line on Friday would project to a similar 979.31 if confirmed today. The important 1019.95 number came from the monthly chart discussion on Saturday, which showed that if 1019.95 is broken the bears will have the upper hand with an initial downside objective between 910 and 940. Other downside targets were discussed as well in those postings.On the latest daily chart, the medium (blue line) moving average proved strong resistance last Friday. The ensuing decline retraced all of Thursday’s GDP rally and broke the Beta - Z trend line on the Level 2 Price Pulse chart. This price action begs the question: Was Thursday’s rally the bull’s last gasp? I think that it was, in the sense that the trend has now turned. The bulls may still stage a vigorous rally, but the chances of making a new high from here are quite slim.
Today will be important if only because the RSI and Composite indices are not confirming the new price low. If price and these indicators were to turn up here we could get a nice pop to the upside. Such a rally would eventually provide us with our missing TD Sequential “sell” countdown bars #12 and #13.
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