SPX Daily Chart - 8 Sep 11

     We are being squeezed between two moving averages. Which way will we break?
     In the last daily update (1 September) we saw the cash SP500 react downward after reaching the medium (blue) moving average. We then barely held contact with the short (red) moving average. From the short moving average I was expecting that we would reach for an even higher target. However, we reacted negatively once again to the medium (blue) moving average yesterday which is now parallel to the TD Supply line. And once again -- down to the short moving average. What now?
     At this point I still think the bulls have unfinished business to the upside. That said, I think the fight today will be over the weekly price flip point of 1178.81 and keeping the daily RSI above the 38 level. A failure to do either will lead to a test of  Demand (upsloping dashed green line) and the September 6 low. The price pulse model says that the bulls have failed if we break below the August 22 low of 1121.09.
     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 early August low; albeit quite a choppy one. My mechanical allocation mix meter is at +50% - yesterday's post of 25% was in error. Until further evidence develops or we break 1121.09 I think that the bullish potential over the near term should be respected.

SPX Monthly - August 2011

     I am making good progress on recovering from a major computer crash. To get back into the swing of things, here is a quick update to the monthly chart.
     It was quite a volatile month! It also nicely shows why I follow the moving averages I do. The low of the month was nearly identical to the medium (blue) moving average and the close nearly identical with the long (green) moving average. Beyond that interesting point I can only say that this chart is currently bearish - which occurred when the Beta-pulse low at 1249.05 was broken. We are now in the downward moving X-pulse; the delta high occurring at the May high. This price pulse bearish development comes after the June price flip that cemented the TD Combo sell countdown in Februray. Note that this was also the first price flip after a sell setup bar #9 in May.
     Going forward there are a couple of things to watch for:
     (1) Will the decline make a qualified and confirmed break of TDST Support at 1049.33? After a Combo signal this should happen if the trend has really changed. Otherwise we are just in a correction to a larger uptrend.
     (2) Will the RSI hold above the zone reserved for bull market support (38-42)? As in (1) above, a break of this zone would confirm a trend change. Otherwise we are just in a correction of a larger uptrend.
    (3) Will the long and short (red) moving averages act as resistance?
    (4) Will the Supply Line (downsloping red dashed line) act as 'ultimate' resistance? The price pulse theory says this market is bearish unless the delta pulse high is broken.
     Bottom Line: in my asset allocation work this time frame is on a "sell" signal. Only the quarterly and daily charts are positive at this point and so the allocation mix meter is at 25%.
     Back to the daily chart tomorrow.

Computer Crash!

I had a major crash of my computer system which is taking me quite a long time to fix. I still haven't recovered all of my past work and data -- hopefully that will come over the next couple of days. Once that milestone is reached I will resume posting. Thanks for your patience.

Saxby