Pre-Holiday Post

We saw a downtrending day on Thursday that reached for the May 15 low after breaking below the current TD Demand line. As mentioned yesterday, that demand line break was not qualified and; true to form, the market was able to close back above it. For today the only way to qualify that line is to open under it (885.36). Such an open would trigger a trend continuation trade (see below for details).

The strength of yesterday’s decline was enough to favor the interpretation that a Level 1 Z pulse is underway; especially since the Level 2 Beta – X trendline (see May 19 posting for more information) has now been broken decisively. This event, combined with a further decline below 878.94 today would enable us to lower the stop on the open experimental trade position (see below for details).

A new TD Supply line has been formed and sits at 923.20 today. Also note that the Swing Chart (the orange lines that move in a “step-wise” fashion) is on the verge of making a lower high for the first time since this rally began in March.

Well …. It is a Friday just before a three day weekend so respect the bulls today! Have a great holiday weekend. I will post the weekly review either Sunday or Monday morning.

The experimental trade position remains short from 897.34; stop & reverse currently at 930.17. Lower that stop & reverse to 924.61 on a move below 878.94 today. A trend-continuation short trade would be taken today ONLY if the open is less than 885.36. If taken the initial stop would be placed at 900.43. Calculated price objective: 827.71.

Has the Re-test Failed?

After running up to the 94.1% retracement level on Wednesday the cash S&P500 then reversed to ultimately close lower. This “outside” day price action has still not resolved the Price Pulse issue but has set us up to test the 878.94 level. A very strong downtrending day today would point to a L1 Z pulse being underway.

The TD Supply line sits at 928.78 today while the TD Demand line is at 884.07. Please note that if hit the Demand line would not be qualified today, which means that there is usually not much immediate follow through on such a break.

The experimental trade position remains short from 897.34; stop & reverse at 930.17.

Watching the Retest

Tuesday saw another uptrending price bar on the cash S&P500. The price action did not do much to resolve the Price Pulse issue. However, we now have a price fractal and CIT (Change In Trend) in place at last Friday’s low on the daily chart. This clarifies the idea that the immediate issue is whether we break above the May 8 high or not.

There are only two more Fibonacci resistance levels left below the old high. The TD Supply line sits at 928.93 while the TD Demand line is at 882.79. These points represent the “inflection” points of the bullish and bearish cases. I vote for hitting the Demand Line first; failing to make a new high and then going on (over the coming weeks and months) to deeply retrace the move up from March 6.

The experimental trade position remains short from 897.34; stop & reverse at 930.17.

A Run Towards 930

Yesterday’s uptrending price bar on the cash S&P500 index makes it very likely that Friday’s low was a Level 1 Price Reaction Point. My problem is that I don’t know which Price Pulse ended at that point. If the L1 Beta pulse completed at Thursday’s low then the short-lived rally into Thursday’s high was the L1 Delta and then the X pulse completed Friday with Y underway now. On the other hand; if Beta completed on Friday then Delta is now unfolding. Both possibilities are shown on the chart. If we are currently in the Delta pulse the market is almost guaranteed to fail at making a new high but if we are in Y then it is possible.

Price did bounce off of the Level 2 Beta – X trendline (shown in green) while the TD REI oscillator triggered a “buy” signal yesterday. This action supports a retest of the high at least. Fibonacci resistance levels are on the chart and may act as resistance points as we climb towards 930.

The experimental trade position remains short from 897.34; stop & reverse at 930.17.

A New Week Begins

After a downtrending day on Friday the cash S&P500 appears to be in a weak position. If the L1 Beta pulse completed at Thursday’s low then the short-lived rally into Thursday’s high was the L1 Delta and the X pulse is now underway -- and should extend further downwards. On the other hand; if Beta is not yet complete, then it is very long-lived and points to an imminent Delta bounce upwards that is almost guaranteed to fail at making a new high.

We did reach the first TD Trend Factor price objective (purple bar at 878.45) Friday. This is also where the Level 2 Beta – X trendline (green line) can be found. If we can’t hold here the next support level is from 867 – 870. 870 is in opposition to 930 on the Square on Nine.

The experimental trade position remains short from 897.34; stop & reverse at 930.17.