Although I have been yammering about support holding on the daily chart and a possible temporary low being made I don’t want anyone think I am a bull. No, not at all. In fact, I lean towards the view that the May high was the top of the bull run from the 2009 low. Note that I am not yet committed to this view - hence the question mark on the weekly price chart above (bottom pane).
My first reason for concern regarding the bullish case is the wave count. This is not an Elliott count but similar based on price pulses. We are close to confirming the end of a large Zigzag pattern from the 2009 low. This Zigzag is wave ‘D’ within a large Expanding Triangle from the 2000 high. If this view is correct then wave ‘E’ of the triangle will go below the 2009 low.
Next, there was a bearish divergence between the RSI (top pane) and Composite Index (middle pane) at the recent high. Additionally, we see that a TD Combo 13 sell signal was generated on May 10th and a TD Aggressive Sequential 13 sell signal on May 31st. I use these signals in a conservative fashion – to me they are not activated until we get a price flip. Such a flip occurred on June 14th. On the other hand, these sell signals can be negated. For the Combo signal such a negation requires a confirmed, validated break of the 1655.81 level (shown by the horizontal cyan colored line). Breaks of that line during the weeks of May 17th, May 24th and May 31st were subsequently invalidated. Bottom line: This chart is on a technical sell.
From a wave perspective … A move to a new high from here means that the action from May 22 is wave 2 in an upward trending pattern from the X-Pulse (wave 4) low. A break below the April 18th low (1536.03) would be the proof I need at this time to commit to the interpretation that the rally from the 2009 low is complete as the “D” wave of an Expanding Triangle.
Finally, at this time the break of the Beta-X trendline on the weekly chart is not qualified but should at least worry the bulls.
No comments:
Post a Comment