SPX Daily Chart - 16 June 2011

     After all was said and done on Thursday there was little change in my view of the market. Yesterday's low was still above the risk level of the recently completed daily buy setup (horizontal dashed cyan line at 1254.24) and we still have developing bullish divergence between price and the technical indicators I track. Today I show the Derivative Oscillator, which has been rising since the end of what Chuck is labeling wave 3. Does this mean the market must rally? Of course not, as the last few days have amply illustrated. However; I still think a rally is coming before we break below the March low - and time is running out.
     Perhaps the biggest change in the chart is that the Supply line (dashed red line) has readjusted. (Aside: Note how these lines oftentimes parallel one of the moving averages). Any break above that line today (1276.69) will be qualified and may be the first indication that an intermediate term low is in.
  Bottom Line: The allocation mix meter is at +50%. My near term scenario assumes that an intermediate term low will be made above the March low and that a rally will then take us back above the 1344 level. However; I remain quite concerned that the high may already be in for the rally from the 2009 low.    

SPX Daily Chart - 15 June 2011

     The bounce experienced on Tuesday was completely erased yesterday. As 'Wallfly' pointed out in a comment the other day, trying to pick a low here is fraught with risk since the higher level charts are so negative. Keep in mind that I am not a trader but rather a long term investor. I track the short term movements but only to keep my finger on the pulse. Lately I have lightened up my position to 50% (allocation meter) and will take more money off the table if we break below the March low.
     That being said, with the risk level of the recently completed daily buy setup below the market (horizontal dashed cyan line at 1254.24)  combined with a still developing bullish divergence between price and the RSI/Composite index, I still think a rally is coming before we break below the March low. That being said, I wouldn't take such a long trade even if I was a swing trader. Why? Because the buy setup completed below TDST support (horizontal dashed green line at 1279.2).The trend is down; risk is high.
    Bottom Line: The allocation mix meter is at +50%. My near term scenario assumes that an intermediate term low will be made above the March low and that a choppy rally will then take us back above the 1344 level. However; I remain quite concerned that the high may already be in for the rally from the 2009 low.

SPX Daily Chart - 14 June 2011

     Yesterday's rally was in response to an oversold condition: a daily buy countdown bar #9 and bullish divergence between price and the RSI. The question now is whether this move has any staying power. At this point I am willing to give the bulls the benefit of the doubt - if only for a few days. Oftentimes there is a 1-4 day window of bullishness after a completed buy countdown and price flip.
     In today's session I will be watching to see if we get any follow through. If so, the first upside target is the short (red) moving average which will be at about 1297/8 today. If not, I want to see if the bulls can contain the damage by keeping the hourly RSI above the 38 mark.
     Bottom Line: The allocation mix meter is at +50%. My near term scenario assumes that an intermediate term low is in and that a choppy rally has begun that will eventually take us back above the 1344 level. However; I remain quite concerned that the high may already be in for the rally from the 2009 low.

SPX Daily Chart - 13 June 2011

     On Monday the cash SP500 broke TD Support of 1279.20 in the process of meeting the weekly TD Trend Factor target of 1265.68 - the low of the day was 1265.64. This price action also completed a daily buy countdown bar #9 and bullish divergence between price and the daily RSI. It looks like any rally from here might just be counter trend.
     The hourly chart has shown a good attempt to form a base from which to rally over the past two sessions. There was bullish price/RSI divergence yesterday and the market is fighting to finally hold the area reserved for bull market lows; which is an important first step in starting a rally.
     In today's session I will be watching to see if any rally attempt at the open can clear the 1279.52 level. If so, Chuck tells me that this will mean the Elliott Wave from the 1345.2 high is complete. He says it would be either wave '3 of C' or 'c of C' (depending on whether an expanded Flat or triangle is forming from the February high. I have added Chuck's count to today's chart. Most importantly would be a bullish price flip on the daily chart - a close today above 1279.56 would do the trick. If these two conditions are met we may have an actual multi-day rally attempt on our hands.
     Bottom Line:  The allocation mix meter is at +50%. My near term scenario has the current decline ending imminently (if it hasn't already) and holding above the March lows. This will be followed by a choppy rally that takes us back above the 1344 level. However; I remain quite concerned that the high may already be in for the rally from the 2009 low.

SPX Weekly Chart - 10 Jun 2011

     Please keep in mind that we will have a monthly price flip if we close June below 1327.22. Such a flip will trigger the already completed TD Combo and sell counts on the monthly chart. These signals would then occur with bearish divergence between price and the composite index, and between price and the derivative oscillator. In sum, the risk of a significant top in equities remains high.
      As stated last week, the weekly chart is also quite weak right now - if not outright bearish. Note that we have now met the calculated minimum objective (1282.73) associated with the qualified break of the TD Demand Line (upsloping green line on chart). Last week's price action also confirmed the break of the short (red) moving average and we've now closed below the medium (blue) moving average. We'll see if we can confirm that break this week. The TD Trend Factor target is just below the market at 1265.68.
     The weekly chart's price pulse scenario can be captured (p. 109) by these words from Tony Plummer's book "Forecasting Financial Markets: Technical Analysis and the Dynamics of Price": "A short term sell signal is triggered as the x-wave falls below the bottom of the Beta-wave. However, the subsequent y-wave rally may abort the signal by rallying back above it; indeed, it may even retrace close to the peak levels established by the alpha-wave and the delta-wave. A longer-term (or regenerated) sell signal is given when the z-wave penetrates below the bottom of the x-wave." The pulses are marked on the chart.
     I am expecting the upcoming y pulse (wave) to begin before the March low is broken and for it to lift prices above the peak of the alpha pulse but perhaps not the delta pulse.
    Bottom Line: The allocation meter is now at +50%. If meeting the TD Line objective and the Trend factor target are not enough then the March low is the next target. 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%.