SPX Daily Chart - 11 April 2011

     We begin today with a review of the last two TD Sell Setups. The first completed on February 11. The associated risk level of 1345.5 was never reached before the price flip of February 22 (shown by the red arrow). There is always an associated 'risk' level with each completed sell setup. If broken in a qualified manner you can say that the odds favor a continue run higher until at least the completion of sequential or combo countdown. The second setup completed on March 31 with a correctly calculated risk level of 1341.59. We had a price flip last Friday (April 8) before a qualified break of that risk level.
     My price pulse work now indicates that the 'y' pulse has completed. Combine this development with the price flip of last Friday and it is quite possible that the market has topped, failing in its retest of the February high. Furthermore, although not shown on the chart, the RSI bearishly diverged with the Composite Index at the last closing high on April 6. Lastly, all of these negative developments have come after the RSI (in its role as a trend indicator) indicated that a bear market began at the mid-February high. In fact, the rally from March 16 never saw the RSI move above the area reserved for resistance in bear markets (shown by the parallel red horizontal lines).
     Bottom Line: The scenario that price has failed the retest of its February high must be respected. The daily chart remains in a bearish mode with the allocation mix at a +50% reading. The chart would turn bullish with a qualified break of 1345.5. First short term downside objective would be the medium (blue) moving average now at 1311.39.