Can Bulls Push Cash S&P500 To a New High?

The bull charge continued on Thursday as another up trending price bar was formed in the cash S&P500 index. Nothing has changed since my report yesterday as the important attack on the June 11 high is underway.

Bottom Line: My bearish view will be abandoned on a move above 956.23.

One “bearish” (for equities) item I continue to watch is the action in the CRB index. Since the March low equities have been moving in tandem with the CRB. However, after they both sold off from the mid-June high, the CRB index has not staged a strong, dramatic rally like the equities over the past week. Yes, there has been a rally, but it looks much more like just a bounce in a continuing downtrend.

Awesome!

There is only one word to describe what the bulls accomplished yesterday: Awesome. After a gap higher at the open, the bulls stampeded through potential resistance at 917 from the intermediate (solid blue) moving average and the weekly TD Supply line at 915.71.

My position on the question “Has the rally that began in March resumed, or is the action over the past few days just a bounce before a deeper/longer correction?” has been that the uptrend has resumed if we can qualify and *confirm* a break of the current Weekly TD Supply line. We have now had a qualified break and only confirmation is required, which can come as soon as Monday.

An important aspect of my cycle work is staring me in the face here. Any move above 956.23 (the June 11 high) will mean a *mandatory* rally lasting to at least the Autumnal equinox. This makes sense when viewed within the context of the weekly DeMark chart. To get to a TD Sequential Sell signal we need at least ten more weeks of upside action from here.

Bottom Line: My bearish view will be abandoned on a move above 956.23.

Working Through Computer Issues

After two days of fighting computer problems I am ready to fight the technical analysis battle once again. In Sunday’s post I noted that a “… bounce may occur from last weeks low. Such a bounce would be likely if we fail to break cleanly below 869 on Monday and could last a week or two.” After dipping into negative territory briefly Monday morning we began to rally sharply and never threatened 869. I also stated that “In this scenario we should watch to see if the short term moving average (solid red line at 902 this week) provides resistance.” We have now reached that level.

On the daily chart there was a bullish divergence between price and the RSI (top pane in today’s chart) indicator that was cemented in place on Monday’s rally. This occurred as the RSI held above the critical 38 level; the area where bull markets typically find support. With the daily chart showing strength we are again faced by the question: “Has the rally that began in March resumed? Or is the action over the past few days just a bounce before a deeper/longer correction?” My answer to that question continues to be that we will only get confirmation that the uptrend has resumed if we can qualify and confirm a break of the current Weekly TD Supply line. That line stands at 915.71.

We have now hit daily chart resistance at the short (solid red) moving average (902). Let’s see what happens here - pullback or a move to the intermediate (solid blue) moving average (916). The test of the weekly TD Supply line is on!

Meine Komputer Ist Kaput

The power supply died on my main computer ..... hence no data. I should have it fixed shortly; and look to post again by Wednesday morning at the latest.

Cheers!

Weekly Chart Review for July 12

It was a downtrending price bar on the weekly chart of the cash S&P. We continue the pullback/consolidation since the June 12 high after having a weekly TD Sell Setup perfected on June 1 and a technical “sell” signal (bearish divergence between the RSI and Composite Indicators) on June 19.

Last week’s decline did not add any new information to our technical picture and so we still face the same question: “Will the rally that began in March resume? Or will we have a deeper/longer correction due to the Sell Setup plus technical sell signal? “My answer to that question continues to be “… we will only get confirmation that the uptrend has resumed if we can qualify and confirm a break of the current TD Supply line (downward sloping dashed red line on the price chart).” That line has now been readjusted and stands at 915.71 for the coming week.

Note that we have declined below the TD Demand Line (the upward sloping dashed green line). The break of this line was not “qualified” and raises the odds that a bounce may occur from last weeks low. Such a bounce would be likely if we fail to break cleanly below 869 on Monday and could last a week or two. In this scenario we should watch (besides the TD Supply line) the short term moving average (solid red line at 902 this week) to see if it provides resistance.