We had an upside opening gap that was not filled during the trading session Tuesday. As explained yesterday, this means that the dip below TDST support was invalidated … the cash SP500 bulls continue to cling on! There were also a couple of other developments that lend support to the bullish case over the short term:
RSI Range. Although an oscillator, the RSI (top panel) can be used as a trend indicator as shown by authors such as Constance Brown. The decline from the May high is still holding the area reserved for bull markets (above the 38 level). Like with TDST support, Monday’s price action threatened to, but could not push this indicator into a bearish trend status.
Composite Index. This indicator (middle panel; invented by Connie Brown) has just made a bullish divergence with the RSI.
Right now the best I can see for the bulls is a rally that peters out by July 8. I can even see the June 18th high of 1654.19 being broken – but not the May high. This is not a prediction or what I expect but the best case bull scenario I can envision. Let’s see what the bulls have.
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