SPX Daily Chart - 1 September 2011

     The cash SP500 reached the medium (blue) moving average and we are now seeing a reaction to that level. Without a signal in the technical indicators my only conclusion is that we will only see a consolidation or pullback to the short (red) moving average here before we reach for an even higher target.
     Those higher targets include: 1245-1247 fibonacci and Trend Factor targets, the long (green) moving average and TDST resistance at 1332.
      Bottom Line:  I believe a counter-trend rally is underway from the August lows. My mechanical allocation mix meter has risen to +50% - the bullish potential over the near term should be respected.

SPX Daily Chart - 31 August 2011

     The cash SP500 reached the medium (blue) moving average yesterday. Will there be a reaction here? The early read of the technicals say that if there is, it will only be a hesitation,  and that a higher target will be reached for.
      The price targets to watch are: The medium (blue) moving average, 1245-1247 fibonacci and Trend Factor targets, the long (green) moving average and TDST resistance at 1332.
      Bottom Line:  I believe a counter-trend rally is underway. My mechanical allocation mix meter has risen to +50% - the bullish potential over the near term should be respected.

SPX Daily Chart - 30 August 2011

     After making an x-pulse low at a TD Buy Setup, the cash SP500 bounced in a y-pulse. The low was then successfully retested on August 19/22 when the z-pulse did not make a new low. A price pulse "buy" signal then confirmed the previous buy setup when we had a confirmed break of the supply line (delta - y trendline) on August 29. Yesterday the rate of advance was much slower but the market traced out an uptrending bar.
      The price targets to watch are: The medium (blue) moving average, 1245-1247 fibonacci and Trend Factor targets, the long (green) moving average and TDST resistance at 1332.
      Bottom Line:  I believe a counter-trend rally is underway. My mechanical allocation mix meter has risen to +50% - the bullish potential over the near term should be respected.

SPX Daily Chart - 29 August 2011

     When we last left the daily chart (16 August) I thought that we needed to retest demand (the low) again before a sustained bullish rally can get underway. That retest occurred on August 19/22 and was turned out to be successful. As noted yesterday it came in conjunction with a bullish divergence between the RSI and composite index on the weekly chart. Then, after an unqualified break of the daily supply line (downsloping red dashed line) on august 24, we had a qualified break on the 26th which was confirmed yesterday. The magnitude of this supply line break is such that a substantial retracement rally is possible although not necessary.
     Also note that yesterday's price action means that an A-B-C pattern may have completed on the daily D-wave chart. Just another reason to respect the bullish potential over the short term.
     There have also been developments in the price pulse as the x, y and z pulses have been confirmed complete. In this instance the buy signal matched the supply line already mentioned. With a buy setup in place (on August 9) the confirmed break of the supply line (delta - y trendline) raises the allocation mix meter to +50%.
      With that being said, the weekly chart hints that this is only a counter-trend rally. Thus the idea is to identify targets on the daily chart and watch for a reaction and confirming technical signals. Those targets are: The medium (blue) moving average, 1245-1247 fibonacci and Trend Factor targets, the long (green) moving average and TDST resistance at 1332.
      Bottom Line:  I believe a counter-trend rally is underway. My mechanical allocation mix meter has risen to +50% - the bullish potential over the near term should be respected.

SPX Weekly Chart - 26 August 2011

     Stepping back for a minute .... if we are not going to new all time highs in this rally that started in 2009, then we are in a "B" wave on the D-Wave Quarterly chart. The monthly chart shows that a possible A-B-C sequence has completed at the May 2011 high. This zig-zag interpretation is favored since the monthly RSI topped out in the zone reserved for bear market resistance. With that assumed background, the weekly chart shows that an A-B-C or 1-2-3 structure has formed from the May 2011 high. These D-Waves match (in this particular instance) the price pulse x and y pulses shown on the chart. Since the RSI has broken below 38 I favor the bear market 1-2-3 D-Wave count.
     Note that the May 2011 high was associated with the failure to make a qualified break of the risk level associated with the completed sequential sell countdown of February 18, 2011. In retrospect, this analysis results in viewing the five months from February 18th to July 22nd as topping action. Since then we have confirmed the the break of weekly TDST support (horizontal dashed green line) at 1219.50. This strong market decline has been 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.
     Simply put, the cash SP500 is now in a bear market at this time frame. Note that the low of August 12th came right at the 38.2% retracement level of the 2009-2011 rally. One week later the RSI bounced off of the level reserved for support in bear markets and the Composite indicator made bullish divergence with the RSI. This suggests either a bounce or consolidation is underway. I favor the consolidation scenario in a D-wave fourth wave.
     Bottom Line:  At this time I think the levels to watch are the long (green) moving average and the Demand Line (dashed green line). Qualified, confirmed breaks of these lines would point to; respectively, either a bounce (vice consolidation) or renewed decline. The allocation meter is at +25% and I am expecting the August low to give way after this consolidation/bounce completes.