The big development last week was the qualified break above the risk level of 1363.53. The market then immediately reversed and the focus in my recent posts has been on false breakouts. This led to the hypothesis that we will see new highs without breaking below 1294.7 (the April 18 low).
As far as Demark counting goes, the next possible sell signal would be a sell setup; which, if it were to occur, is still three weeks away.
Let's take a look at the RSI (top pane). Can one make the case that a massive bearish divergence has occurred just as we had a potentially false breakout above the risk level? Yes, but I don't buy it. Why? I think the recent positive reversal takes precedence. That reversal is shown by the two arrows on the RSI which match the November 26, 2010 and March 18, 2011 price closes. This reversal calculates to a 1432.81 price target. The price target associated with the break of the TD Supply line (which has now been qualified) is 1429.87.
Finally, a note on the Elliott Wave structure. A good friend of mine is quite good at this technique and is confident that the count shown on the chart is correct. I am aware of the subjectivity of this method but am impressed enough with his work that I decided to show his count - with his permission of course! The take away is that we may now be in a fifth wave, which would be the final part of the entire move up from the July 2010 lows.
Bottom Line: The weekly chart is in a bullish position and the allocation mix meter is at +100%.
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