SPX Daily Chart - 14 July 2011

     After hesitating at the short (red) and and long (green) moving averages Tuesday and Wednesday, the cash SP500 broke below them in a qualified manner yesterday. On the hourly chart, the price action on Tuesday and Wednesday can be seen as a consolidation and then short-lived upward bounce in response to a buy setup. Yesterday's decline broke below the support (risk) level associated with this setup in a qualified manner and was validated - an indication that the downtrend has resumed. As such, the medium (blue; about 1302) moving average is the next support level to watch on the daily chart. The weekly medium moving average is also at this level. I have also added the Trend Factor target of 1281.06 to the attached chart.
     From a price pulse point of view, the daily chart is now in a beta pulse of a bearish pattern. The pattern can not turn bullish unless beta completes above the z bottom and we then go on to exceed the alpha high.
     Bottom Line: The allocation mix meter is at +50%. I remain quite concerned that the rally high from the 2009 low was made on May 2. As such, I will be watching closely for confirmation that the July 7th high was the top of a counter-trend rally.

SPX Daily Chart - 12 July 2011

     The cash SP500 reached the short (red) moving average yesterday morning while recording a buy setup on the hourly chart. This provided support until the last hour of the day and we closed below both the short and long (green) moving averages. If these moving averages can't hold in the first hour of trading today then the medium (blue; about 1303) moving average is the next support level to watch. The medium moving average is also at this level on the weekly chart.
     From a price pulse point of view, the daily chart has just completed an alpha pulse in a bearish pattern. This means the pattern can not turn bullish unless we complete the current beta pulse above the z bottom and then go on to exceed the alpha high.
     Bottom Line: The allocation mix meter is at +50%. I remain quite concerned that the rally high from the 2009 low was made on May 2. As such, I will be watching closely for any sign of a potential top as we move forward. In particular, two events would be very bearish: An outright break below 1249.05 or a failed retest of the July 7 high.

SPX Daily Chart - 11 July 2011

     After reaching and validating an upside break of the Trend Factor (TF) target at 1338.12, the cash SP500 then broke above TDST resistance at 1345.20 (red horizontal dashed line). The break was not qualified (I am using the rules outlined in Jason Perl's book) and has been followed by a 40 point decline over two days. Also note that the high on July 7 was accompanied by an RSI peak in the area reserved for bear market resistance. The possibility that the move off the mid-June low is complete and was a counter-trend rally must be respected.
     The low yesterday was at the long (green) moving average. 1314-1316 is the current support level. If that can't hold then 1303 needs to be watched.
     Bottom Line: The allocation mix meter is at +50%. I remain quite concerned that the rally high from the 2009 low was made on May 2. As such, I will be watching closely for any sign of a potential top as we move forward. In particular, two events would be very bearish: An outright break below 1249.05 or a failed retest of the July 7 high.

SPX Weekly Chart - 8 July 2011

     Not much change on this time frame from my last posting; although believe it or not, we just had the second highest weekly closing price since the March 2009 low, and we've now achieved my 1344 target level.
     The current 'y' pulse rally can move us to new highs but I don't expect that. Instead I am expecting to see topping action before we reach the delta pulse high. Key will be the old sequential 13 risk level (shown by the horizontal cyan dashed line) at 1363.53 and the current supply line (the downsloping red dashed line). Let's see if the bulls can break them in a qualified manner and let's also see what the technical indicators look like if and when we get there. I particularly want to see if the RSI can get above the 63-67 zone.
    Bottom Line: The allocation meter is at +50%.