SPX Daily Chart - 24 Feb 2011

The short moving average is in red at the 1325 level.

SPX Daily Chart - 23 Feb 2011

     The pullback in the cash SP500 has now turned the weekly price pulse trend downwards. We would have to close the week at less than 1276.34 to turn that chart negative.
     Yesterday's low was at the wave 2/4 trendline (in orange) which was objective #1 mentioned yesterday, The price action was also enough to deem the recent high as Wave 5 in an impulse pattern that began at the July low.
     Bottom Line: The daily chart is bearish and my so called "Timeframe Mix" is now at +75%. This value ranges from 0 to 100 and gives me a long-term cash allocation guideline as to high to view the equity markets. Let's see if we get a bounce from the 2/4 trendline and medium-term moving average (dark blue) lines. If not the next target is the TDST Support line in dashed green labeled as objective #2.

SPX Daily Chart - 22 Feb 2011

     On the daily chart (shown above) we have just qualified a break of the TD Demand Line (upsloping dashed purple line) while also making a price flip. Is the daily chart now negative? Yesterday I stated that any break of 1321.87 would turn the chart bearish. With that level exceeded and the low of the day (1312.33) breaking below the daily price pulse beta - z trendline (upsloping blue line at 1312.36), the chart is indeed now officially bearish.
     Also of note is the low price of February 2 (1311.74) shown on the chart as a short horizontal blue line. We fell to just above that level, which would also confirm the price pulse trend as downward on the weekly chart. That chart won't be classifed as bearish without a price flip.
     Bottom Line: Now that the daily chart is in a bearish mode we can start to watch downside objective levels to see whether there is a reaction or not. The first is the wave 2/4 trendline (in orange), the second the TDST Support line in dashed green, the third the TD Trend Factor target in dark purple and finally the 23.6% Fib retracement of the rally from the July low. I have numbered these as 1-4 on the chart.

SPX Weekly Chart - 18 Feb 2011

     A 9-13-9 pattern completed on the daily chart on February 11. The rule of thumb is to look for a reaction within 4 bars of pattern completion. What if last Friday were the high? Is a reaction beginning on the fifth bar too late? Not according to the risk level associated with the 9-13-9 which is at 1345.5 and has not been violated. Once time has run out the signal is negated on any move above the risk level, and that hasn't happened yet.
     On the weekly chart (shown above) we have just completed a sequential 13 and so the charts are still warning of exhaustion. What specifics would turn each chart negative? On the daily the first step would be a break of the TD Demand Line (1344.31). Any printed price below that level would qualify the break.today. The next step would be a price flip - a closing price below 1328.01. A break of 1324.61 would be the first indication that the daily price pulse is on the verge of signaling a "sell".
     On the weekly chart the first step would also be a break of its TD Demand Line (1328.52). Any printed price below that level would qualify the break this week. The next step would be a price flip - a closing price below 1276.34. A break of 1321.87 would trigger a weekly price pulse "sell".
     Bottom Line: Taking all of the above into account, I would use any break of 1321.87 as the signal that the daily chart has turned bearish (daily price flip plus higher level price pulse signal). The weekly chart needs a price flip before it can be termed bearish. Until those criteria are met I believe that both charts remain in a bullish position.