Yesterday I presented a review of the monthly chart. That work indicated that if 1019.95 is broken the bears will have the upper hand with an initial downside objective between 910 and 940. This zone complements the conclusion from last week when I wrote “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.“Reviewing the action over the past month or so, there has been a longstanding TD Trend Factor target of 1079.39 (solid purple line). Note that the first two times we broke that line to the upside (9/25 & 10/16) they were not qualified breaks. We finally had a qualified break the week of 10/23 but then failed to confirm this week. Result? This Trend Factor objective has been met and is acting as resistance to the advance. This week’s failure is a down trending price bar which has made a qualified break of the TD Demand Line (upward sloping dashed green line). If qualified next week with a move below 1033.38 it projects to 987.51, which is below the critical monthly chart value of 1019.95.
Another downside target would be the medium moving average (solid blue line) which should be at about 960 next week. Below that come the targets derived from the monthly charts. We should keep an eye on the market action to see how price reacts at each of these targets.
Bottom Line: The recent RSI/price divergence has led to a sharp decline this week. A move below 1033.38 would make me intermediate term bearish. Break 1019.95 and I become longer-term bearish as well.
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