Although we made an up trending (higher high and higher low) price bar on the weekly chart of the cash S&P500 it doesn't inspire much bullish confidence. It was a spinning top candlestick with a long upper shadow. When seen at price highs these are indications that the trend may be stalling. Additionally, we made a bearish divergence between price and the RSI. However, against this bearishness we must admit that we keep making higher highs and that the DeMark indicators have not signaled exhaustion of the up trend.We opened above both the TD Trend Factor target of 1079 and the TD Supply Line (down sloping dashed red line) and then had some follow through on Tuesday which qualifies the breaks. We now need a new high this coming week to confirm them. A failure to confirm will leave us with failure at the TD Trend Factor target, continued bearish RSI/price divergence, and an open downside price projection of 987.51, which is below the critical monthly chart value of 1019.95. 987.51 also coincides with a 50% retracement of the move from the TDST support line and is where the medium moving average is headed.
Bottom Line: This week’s closing price is only 3.7 points above where it was five weeks ago. What does the weekly chart say about this (essentially) sideways moving price action? Not much. Perhaps the best interpretation is that although one can’t claim the rally from March is ending there is concern of a decent pullback (987 area). I will explore what the daily chart “thinks” of this possibility tomorrow.
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