After a brief dip at the open the cash SP500 market recovered to make a new rally high before moving sideways for 3.5 hours. The bears moved in late in the session and we sold off into the close, invalidating Tuesday's break of the supply line target and proving it to be (at least short term) resistance. Yesterday's high also marked the end of D.5 on the 15 minute chart and the end of the upward moving hourly D-Wave from the June 16 low. The question now: Did the late day sell off begin a move to new lows or is it just a pullback before moving higher?
The hourly chart completed a sell setup at the high while breaking up through hourly TDST resistance at 1296.22. However, this was not a qualified break and we pulled back below that level before making another (and this time qualified) break upwards at 1 pm. However, the combination of completed D-waves, a sell setup and bearish divergence with the RSI were enough for the bears to gain control into the close.
The fact that the sell setup sequence had a bar with a close above TDST resistance along with the validated break of TDST resistance itself lead me to believe that we will end up with just a pullback before price moves higher again. I will be watching the short (red) moving average to be a support area. If prices then resume moving higher the next strong area of resistance on the daily chart is 1310-1316.
Bottom Line: The allocation mix meter is at +50%. My near term scenario assumes that an intermediate term low is in and that a rally will now take us back above the 1344 level. However; I remain quite concerned that the rally high from the 2009 low was made on May 2. As such, any break below the March low of 1249.05 will cause me to lighten my position even further as the allocation meter would fall to +25%.
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