On Thursday the Beta-X trendline was broken and the market ended just above TDST support (see chart of the daily cash SP500). Note the selloff occurred after hitting the Fibonacci 61.8% retracement level.
Did we have a qualified break of the Beta- X line? To answer that question I use the 3 criteria outlined on page 107 of Jason Perl’s book “Demark Indicators.” In this case we fail to meet any of the three conditions and conclude that we did not have a qualified break. That may change today, but so far we can’t say that that important line has broken.
On top of that the RSI stands at 39.5 today – in the zone reserved for bull market support. Additionally, the Composite and Derivative Oscillator values are threatening to form bullish divergence with the RSI.
Conclusion? A snap back rally today could mean that at least a temporary low is in place (TDST Support held!) and that a retest of the May high would not be unexpected. Therefore, rally today and the question goes back to the bulls – ‘can you keep the rally alive?’
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