SPX Daily Chart - 26 May 2011

     Thursday's session began with the cash SP500 breaking down through 1318.47 and heading towards TDST Support. The low of the day was then made above that support level and we rallied through resistance at 1322.93 and then above Wednesday's high to confirm the close above the long (green) moving average. The morning decline also held the support area defined for bull markets in the hourly RSI.
     Upside resistance levels today will be right at the open (weekly short moving average is at 1325.89), 1332.5-1335.5 (daily short/medium moving averages), and then 1336.00 (TD Supply Line). Support remains at the long moving average (1321) and TDST Support (1312.62).
     Bottom Line:  The allocation mix meter remains at +100%.  I am still expecting to see new highs before the April low is violated.

SPX Daily Chart - 25 May 2011

     The cash SP500 index continues to move sideways, holding TDST support while the RSI holds the bull market support area. Although I am not quite convinced that the decline has seen its lows, there was a bullish divergence between price and the RSI yesterday morning on the hourly chart.
     A good way to continue the rally would be for yesterday's close above the Long (green) moving average to be confirmed. That would point to a test of the other moving averages at the 1335.5 level. I will be watching 1322.93 and 1318.47 early today to see which way we break.
     Bottom Line:  The allocation mix meter remains at +100%.  I am still expecting to see new highs before the April low is violated.

Chuck's Waves - Dollar Index

SPX Daily Chart - 24 May 2011

     Yesterday I laid out four items that I would be watching regarding the cash SP500 data.
     1) If Monday's close below the long average can be confirmed on Tuesday.  It was not confirmed and would indicate a bounce towards overhead resistance (medium and short moving averages).
     2) whether we continue to hold TDST support, So far we have but the bulls need to see price move away from it!
     3) whether the RSI (top pane) can hold the bull market support level, So far we have, but like with TDST support, we remain (if you are bullish) uncomfortably close.
     4) whether a bullish divergence forms between the RSI and Composite. This did not happen and must be considered a disappointment for the short term bullish case.
     Overall, yesterday's session can only be said to be mildly encouraging for the bulls. TDST needs to hold here.
         Bottom Line:  The allocation mix meter remains at +100%.  I am still expecting to see new highs before the April low is violated.

SPX Daily Chart - 23 May 2011

     The cash SP500 did not confirm its close above the short (red) moving average last Thursday and sold off after reaching the TD Supply line. The downturn in price on Friday put a negative reversal in place in the Composite Index (middle pane) with a calculated minimum target of 1314.52. That target was reached yesterday as we closed below the long (green) moving average but managed to avoid breaking TDST Support at 1312.62. Note that yesterday's drop below the Demand Line can be considered a false break.
     For today I will be watching to see; 1) If the close below the long average is confirmed, 2) whether we continue to hold TDST support, 3) whether the RSI (top pane) can hold the bull market support level, and 4) whether a bullish divergence forms between the RSI and Composite. These four markers will tell us a lot about the short term direction of this market.
         Bottom Line:  The allocation mix meter remains at +100%.  I am still expecting to see new highs before the April low is violated.

SPX Weekly Chart - 20 May 2011

 

     The primary working point on this chart continues to be the qualified break (two weeks ago) above the risk level of 1363.53. Since then the market has slumped and the question is whether we have a false breakout on our hands. My working hypothesis has been "no"; that we will see new highs without breaking below the 1294.7 level (the April 18 low).
     As far as Demark counting goes, this week's price flip means that the next possible signal would be a sell setup sequential countdown; which, if it were to occur, is now a full nine six weeks away. [Correction made 7:43 am on 23 May]
     Note that we can break the Demand Line (upsloping green line) in a qualified manner this week by opening below 1340.35. Doing so increases the odds that we will also close (on Friday) below that line.
     Let's also review the RSI (top pane). One can make the case that a bearish divergence has occurred just at the time we had a potentially false breakout above the risk level. However, I was not buying it two weeks ago because of the positive reversal 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. If the RSI breaks below the blue line defining the positive reversal it will be negated.
     Bottom Line: The weekly chart is in a bullish position and the allocation mix meter is at +100%. Although currently still expecting new highs there are clear events that would tell me I am most likely wrong; a breakdown in the RSI and, primarily, price violating the 1294.7 level.