SPX Daily Chart - 11 August 2011

     Ignoring the volatility, a key aspect of the last few sessions has been the fight over the risk level (1127.87) associated with the sequential buy signal on the hourly cash SP500. At Wednesday's close we had a qualified break below this level but the bulls regrouped overnight and were able to hold at the open on Thursday. This led to the break being unconfirmed and another thrust upward. Price then reached our initial target zone during the closing hour.
     I still believe that we will need to retest demand (the low) again before we can say that a sustained bullish rally is underway - - and the current demand line (dashed green line) reflects this well. For now however, we need to watch how price reacts at each of the target zones. Yesterday's break above the zone around 1180 (fibonacci and trend factor) was qualified. Let's see if we can confirm it today. I need to add the 1215 area to the list of resistance levels as the short (red) moving average is sinking towards it. Right above that is still the target at about 1245.
      Bottom Line: The allocation mix meter is at +25%. Watching for the bounce to hit resistance which will lead to a retest of Tuesday's low.

GLD Weekly Chart

      Like the Quarterly and Monthly charts presented previously, the weekly chart is in a bullish position. Starting from the 2008 Wave IV low (as analyzed on the monthly chart) we can see that the weekly is in the D-wave 5 position of an upward trend. The next chance of an exhaustion signal associated with that fifth wave would be a new sell setup. We are working on bar #6 of such a setup this week.
     Finally, price pulse theory states that we need to watch for a break of the Beta - X trendline here before deeming this chart as bearish. That trendline is shown by the bold orange line and is generally running parallel to the moving averages.
     Bottom line: Adding this chart to the mix produces an allocation reading of +75%. Only the daily chart is left to go. Look for that over the next few days.

SPX Daily Chart - 9 August 2011

     The bounce is underway; and there is really not much to add in the way of commentary. The initial targets to watch can be seen via fibonacci relationships, moving averages and TD Trend Factor. The assault on the first area to monitor (around 1180) began with the final hour rally on Tuesday. Another (and perhaps more important) target to keep an eye on will be 1245. The short (red) moving average is sinking towards that level now.
 At Monday's close the hourly chart had an unqualified break of the associated sequential buy risk level. This led to a rally attempt that stalled during yesterday's lunch hour. We then fell and actually broke the risk level (1127.87) in a qualified manner at 3pm. However, the break ended up being unconfirmed (higher low) as the bulls took charge during the closing hour. Result: the rally from extreme oversold conditions is on.
     Bottom Line: The allocation mix meter is at +25%. Expecting an oversold rally to be followed by a retest of the low.
     P.S. I will not be able to post Thursday morning.

GLD Monthly Chart

     On the quarterly chart (discussed a few days ago) there were no D-waves completed from the 1999 low. On the monthly chart of GLD we are following a five wave sequence from that low with a fourth wave having completed at the 2008 bottom. That was also the completion of a Beta-pulse. These facts imply that we are currently in a fifth wave which is also a Delta-pulse. This means that the monthly chart is currently in a bullish position.
     As far as TD signals go, a 9-13-9 sell pattern completed in December 2010. However, that signal was negated in April 2011 when we had a qualified and confirmed break of the associated risk level. At this time we are waiting for either a sequential or combo sell signal to develop. The earliest this could happen would be October. Such a signal would most likely be the pullback we are waiting for on the Quarterly chart and would not be a sell signal in my allocation work. That is, the monthly chart would still contribute a +25% to the overall allocation mix.
     Bottom Line: Both the quarterly and monthly charts of GLD are bullish. These two charts add up to a +50% allocation meter reading; but we still have the weekly and daily charts to cover in the days ahead.

SPX Daily Chart - 8 August 2011

     It was another remarkable day in the cash SP500 market; if only because all 500 stocks in that index were down on the day. All of them. And now we watch for the usual scenario to develop: bounce and retest.
     Yesterday marked bar #9 of a daily buy setup. This is the indication that tells us we should watch for a bounce. The indicators I follow then say to watch for a retest. As an example, the RSI (top pane) is now at it's lowest level since September 2001. The composite index is showing its lowest value in at least 28 years!  Extreme indicator readings most often indicate that when the market finally finds its footing and bounces, it will then come back and retest the low.
     On the expected bounce (which should come within five bars of bar #9) we can use fibonacci relationships and moving averages to help set targets as well as TD Trend Factor. This gives me two areas to watch which are marked on the chart: around 1180 and then (and perhaps more importantly) 1245. At Monday's close the hourly chart had an unqualified break of sequential buy risk level, so we may try to start a bounce from here
     Bottom Line: The allocation mix meter is at +25%. Waiting for the bounce.

SPX Weekly Chart - 5 Aug 2011

     It was, simply put, a horrible week for the cash SP500. After qualifying a break of the trendline that defines the entire rally from the 2009 lows (shown on today's chart of the weekly cash SP500 in orange), a feeble rally attempt failed at the short (red) and medium (blue) moving averages. The market then plunged in the Z-pulse of the price pulse model. Recall that the Z-pulse often contains the sharpest declines as the Delta-pulse often contains the largest rallies. The break of the bullish trendline was not only confirmed but the break of TDST support (horizontal dashed green line at 1219.50) was qualified as well. Price continued to fall and finally tried to find support at the end of the week at the long (green) moving averages.
     Using the RSI (top pane) as a trend indicator shows the seriousness of the current decline. The rally from the 2009 lows was shown to be of the bullish variety in April 2010 when the indicator broke above the zone reserved for bear market resistance. Note that we then held the zone reserved for bull market support when we pulled back into the Summer of 2010. This decline also held well above the Long moving average. The bull was reconfirmed on November 5, 2010 when the RSI again moved above the 63-67 zone. Bearish divergence after a sequential sell countdown 13 forewarned of trouble, and now we have broken below the support zone for bull markets and the Long moving average.
     Bottom Line: At this point there is no reason to rush into any new judgments abut the medium term outlook. The bears have reconfirmed their control of the market and the allocation meter is down to +25%.

GLD Quarterly Chart

     The "big picture" view of GLD (World Gold Index); as seen by the Quarterly chart, is dominated from the tremendous bull rally from the 1999 low. Unusual is the fact that we have reached an astounding 40 consecutive price bars which closed higher than the close of the bar four previous to it. This included the string of 28 consecutive such closes through the completion of a sequential countdown in the second quarter of 2008 (2Q08). The implication of this development is that there has been no chance of a sell setup "recycle". The buying pressure has been unrelenting. Now, with the risk level associated with the completed sequential sell countdown (dashed horizontal cyan line at 1224.6) exceeded without even a price flip, this chart is a long way from any TD sell signal. At a minimum we would have to get a price flip to recycle and then another sell setup.
     This same conclusion is drawn from the price pulse model. From the 1999 low we are in a delta pulse of the sequence, and a sell signal can only be generated now with a direct collapse beneath the beta-pulse low. To get a more "reasonable" sell we need an x-pulse pullback followed by a y-pulse rally that sets up actionable sell parameters. Interestingly this is similar to needing a sell setup recycle.
     So is there a pullback in sight that might produce an x-pulse and sell setup recycle? The only hint that this might well be pending is the fact that the tops in the derivative oscillator (bottom pane) are diverging with price. So yes, our x-pulse pullback is coming. But when? To better answer this question we need to drop down to the monthly level which will be covered in my next post on GLD.
     Bottom Line: the quarterly chart is unsurprisingly bullish and would contribute a +25 to an allocation mix meter.