Weekly REI Prohibits a Trade

In last Sunday’s post we were exploring a possible short trade on the weekly chart. It was left with “If the coming week sees lower prices than we will be ready to look at final execution parameters to short the weekly chart.” The new weekly chart is shown with the REI in the top panel. Although the market closed lower the REI has remained above the .45 level.
Why is this important? According to DeMark the fact that the indicator has stayed in the “overbought” zone (above .45) for six consecutive weeks indicates that the uptrend is strong and must be respected. That is, a short trade should not be contemplated at this time based on the fact that a TD Setup has been reached.