Has the Bounce Ended With A Doji?

It was a nice strong day until the last hour or so. The sell-off that ensued still left us with an up trending day on the daily chart of the cash S&P500, but it was not convincing. Candlestick-wise it looks like we had a Doji star with a long upper shadow. These are bearish candles. The market reached for resistance at the 1064-66 (daily medium and short moving averages) level but only made it to 1061. We then closed back below the long moving average on the weekly chart again (now at 1053.82).

Unless we get a higher high today the break of the daily TD Supply line was not qualified yesterday, and so our TD Line targets remain on the downside: 987.51 (from the weekly chart) and 979.31 (from the daily chart). In fact, if the lack of a higher high today is coupled with a lower low then the price structure will look quite weak.

Bottom Line: In no way would I been long here. I have been short-term neutral since October 9th and remain that way now. Most times when the Level 1 alpha-delta trend line (shown Tuesday) is broken in the manner it was the odds are good that the subsequent decline will hold above the x pulse low (1029.38). A failure to do this would immediately change my opinion to outright bearish. I will not consider going to a long-term bearish stance unless 1019.95 is violated. 1019.95 comes from the monthly chart discussion posted last Saturday. It showed that if 1019.95 is broken the bears will have the upper hand with an initial downside objective between 910 and 940.