Medium Price Pulse Study

     Today I will look at the medium price pulse in order to take a closer look at the rally from the 2009 low. Note how an entire medium cycle (in green; alpha-beta-delta-x-y-z) is nested within the first two (in red; alpha-beta) pulses of the next larger cycle. This implies that; in terms of Elliott Wave, we are now in either wave 3 or C from the low.
     Beyond that point of interest we can recognize the strong uptrending nature of the cash SP500 from the 2009 low. In such an uptrend the thing to do is to use the Beta - Z trendline as your stop loss point if you are already long. If not long the idea would be to look for an entry point -- and that won't be signaled by price pulse theory until we first get a 'sell' on the medium term.
     On Monday I will review the Demark Monthly chart.

SPX Quarterly Chart

     On this quarterly chart of the cash SP500 the first thing I want to point out is that D-Wave showed a nested five wave impulse pattern within the larger wave III shown by the equivalent analysis on the yearly chart. Wave III (from the 1932 price low) began at the 1974 low and ran to the 1576.09 high of late 2007. This 'nesting' gives us greater confidence that cycle wave IV began from 1576.09. As marked above, the recent low in 2009 was either the end of IV or just the first part; A of IV.
     Next, we should note that the decline from the 2007 high began at the completion of a TD Sell Setup. Many times such a setup is followed by a 1 to 4 bar correction if not an outright change in trend. The correction was five bars .... which fits the correction scenario. The dashed green horizontal line at 960.84 is TDST support and it was clearly broken. The trend is down. Perhaps this is why the yearly price pulse was cautious going forward .... it is possible that the rally from 2009 is of the bear market variety. It could be wave B of IV instead of a wave V.
     Be that as it may, recall that the quarterly price pulse just turned bullish and even a "B" wave can go to a new high. It's time to take a closer look at the rally from the 2009 low and I will begin that tomorrow with a look at the medium price pulse.

Medium-Long Price Pulse Study

 

     Yesterday we saw how the Demark studies on the yearly chart lent support to a bullish view for the next few years although the long term price pulse (PP) data urged caution. Why the apparent conflict? Let's see if the Medium-Long (ML) price pulse (see chart) can tell us anything.
     The ML PP flashed a 'sell' signal in July 2008 when its beta-x trendline was broken. In this sense it led the long term PP in doing so. However; unlike the long term PP, the ML PP has gone bullish. This occurred in November 2010 when the recent alpha peak was surpassed. Bottom line: Medium-Long PP is bullish; Long term quite cautious. Tomorrow: Demark on the Quarterly SPX.

SPX Yearly Chart

     Although they have reached it via different paths, both Sequential (green label) and Combo (red label) have counted to ten from the 1970's. Since a count to thirteen is required for a signal the *earliest* a sell signal can be reached is at the start of 2013. Please keep in mind that these are very long term price movements being tracked.
     The green ellipse and red arrow on this chart indicate where D-Wave 3 ended. D-Wave 4 will only be indicated as complete with a move to a new high. It is interesting that such a move higher (which would be D-Wave 5 and the last in a great five wave up pattern) might coincide with a sequential or combo sell signal. Again.... this would take a few years to play out in this manner if it does at all.
      This information appears to support a bullish case for the next few years although the price pulse data from yesterday urged caution. Why the apparent conflict? I will pursue this with a look at the quarterly price pulse chart tomorrow.

Price Pulse Theory

     Happy New Year to all! I begin 2011 with a look at the Long Term Price Pulse Theory of the cash SP500. For those unfamiliar with Tony Plummer's work in this area, a complete price pulse cycle is labeled alpha-beta-delta-x-y-z. The resulting patterns can tell you much about the position of the market.
     This chart is telling me two things: One, that I should be leery about the staying power of the rally from the 2009 low; and, secondly, that an Elliott third wave most likely ended before the beta-x trendline break in 2008.
      I will continue this discussion with a look at the DeMark Yearly chart tomorrow.