After registering a countdown 13 bar the cash SP500 moved essentially sideways for nine weeks. It is now the eleventh week since that bar #13. Recall that if the countdown is going to lead to a change in trend it should become apparent within twelve bars and so time is about out. There is nothing that says a complete countdown must result in a change in trend, a simple consolidation is just as valid. In fact, as explained yesterday, perhaps a correction and not a change in trend was the correct event to anticipate.
We should also note that the RSI (top pane) has moved back above the area reserved for resistance (parallel red lines) in bear markets. While this may allow one to claim that the bulls still have room to run, not all the technicals are so supportive. For instance, price is now at a new high while the RSI is not. Any drop in the indicator here would set up a bearish divergence as shown by the two arrows. Also note that while the TD Supply line (in red) was broken, it was not done so in a qualified manner. That being said, we did close (1363.61) above the TD Risk level of 1363.53 last week and we qualified that break yesterday. This means that the countdown 13 we started this discussion with is no longer active and that higher prices lay ahead.
Bottom Line: Since we have had a confirmed break of the 1363.53 risk level the weekly chart is back to a bullish position and the allocation mix meter is back to +100%.
2 comments:
Saxby, been following your blog for some time, mainly as a check on my own efforts. You are better at DeMark than I am by far. But I wanted to point out that I have noticed in the last half year or so thru most all time frames that Risk Levels are frequently broken by a few ticks before reversal takes place.
My best guess is that the algos, perhaps especially the "nuero nets", are picking up on every technical stop technique they can in working the markets. I fully agree with your analysis, but don't be surprised if a reversal of some degree takes place here. It would not be the first time.
Hi Wallfly, and thanks for reading. Funny you mention this as I have noticed the same thing. In fact, I have toyed with modifying the rules on what constitutes "qualification" but haven't decided on anything better yet.
I guess we can use the current weekly chart as a test case.
Saxby
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