The cash SP500 fell during the morning, breaking below the March low of 1249.05 which was critical to the monthly chart and the equity asset allocation meter. I have taken more money off the table and now only have a 25% position. By the end of the session the market had recovered all of its losses on the day and finished positive.
On the hourly chart the TD sequential buy that completed at 1pm Tuesday never executed as we had a valid and confirmed break of the associated risk level of 1255.95. Interestingly, the market bottomed within a point of the calculated target from the confirmed break of the TD supply line (upsloping dashed green line) presented yesterday. At the noon hour the hourly then completed another TD Buy setup which led to the bounce into the close. Disconcerting is that the hourly RSI made low along with price - there was no bullish divergence. At first blush I interpret this as telling me a longer-term low is not in.
Wednesday's price action dipped below the risk level (shown on the chart by the horizontal dashed cyan line at 1242.03) associated with the sequential buy signal on the daily chart. This was an unqualified break and is something the bulls can try to build on. Keep in mind that in my work the sequential only gives a "buy" signal if we get a price flip before a qualified and confirmed break of the risk level. That would occur on a close today above 1292.28. Furthermore, It would still take a price pulse buy signal (a move above the delta pulse high of 1347) before the allocation meter would be raised.
Bottom Line: The allocation mix meter is now at +25%. Yes, this implies that as a longer term investor I think a significant equity top is in. I view any sequential buy signals on the hourly and/or daily charts as indicators of nothing more than a counter-trend rally. Perhaps playable by traders but not by my system.
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