SPX Monthly Chart - April 2011

     The cash SP500 completed a TD Combo countdown to bar #13 in February 2011. In my work this is not an automatic "sell" signal. That requires both a price flip and monthly price pulse sell signal. Neither of these events occurred in April. A price flip would happen in May if we close the month below 1286.12. The Price Pulse signal is a more stringent requirement, requiring a print below 1249.05.
     Regarding the Combo/Sequential signals: My hypothesis at this point is that a price reversal and change in trend should only be expected on the lower time frames (weekly & daily) if a signal has registered on the higher time frame - in this case the monthly. This hypothesis implies that we should have only expected a correction and not a change in trend after the  February high.
     Of extreme importance on the monthly chart are the 1403.03 and 1404.05 levels. If price exceeds the first number then any and all Combo or Sequential signals are held in abeyance. If price exceeds the latter number in a qualified manner then we know that the rally from the March 2009 is not counter-trend under TD concepts. Using the RSI (top pane) as a trend indicator we can see that a bear market was confirmed on this time frame in September 2008. Of great interest now is that we are right in the area reserved for bear market resistance. That is, this indicator is saying that if the rally from 2009 is counter-trend in nature we have run out of steam. A move above 67 in the RSI is equivalent in meaning to a qualified break of 1404.05.
     Due to the lack of a change in trend at the February high, it is very likely that the Elliott pattern from the July 2010 low is subdividing. If the March 2009 low started a new Elliott Wave pattern then we are currently in wave three of three (impulse scenario) or three of C (zigzag scenario).
     Bottom Line: The monthly chart remains in a bullish position.