A bit more volatility was evident in the cash S&P500 yesterday. After rallying to touch a new high the market promptly reversed to close lower, forming an outside price bar with a lower close. This overall downside action comes after the market perfected a TD Sell Setup on Monday and follows failure in numerous momentum indicators. We continue on day 11 out of the required 13 for a Sequential and/or Combo sell.
Please note that the Level 1 price pulse Beta - X trend line has now been clearly broken. This is a warning signal that the whole structure is weakening.
Working Road Map: With momentum indicators failing and the Elliott Wave count showing a possible large Zigzag nearing completion, I think risk of a reversal is too high to be going long now. Still neutral (since October 9th). Here is my best guess for the end to this bull run: A decline is underway satisfying the recent TD Sell Setup. Now that we have broken the Beta-X trend line we have to see whether we can hold above 1066.71. I think we will and then we’ll get a final push up that will conclude no later than November 6 and fail to break above 1108. Failure to hold 1066.71 would not rule out a final push to new highs but would lower the odds of that happening.
Prices started lower during the session yesterday and filled the gap left at the open of October 14. This was also in the area of the short (solid red line) moving average. Price found support at the previous gap and then marched higher. At the close we were left with a down trending price bar on the cash S&P500 daily chart. We have basically consolidated since the market perfected a TD Sell Setup on Monday and we continue on day 11 out of the required 13 for a Sequential and/or Combo sell.
