It certainly appears as though the cash S&P500 is now
in a wave 5 rally. If that wave count is correct we should be looking for signs
of price exhaustion like we did yesterday on the monthly chart.
The top pane contains the Relative Strength Index (RSI)
and the middle pane the Composite Indicator. Although the RSI has eked out a
new high the Composite is lagging badly. This is potential bearish divergence. Remember that the Composite Indicator
was created to spot those times when the RSI is failing to spot a momentum
failure.
Right now the TD Combo is on countdown bar 12 (shown in
the chart) and the Sequential is on bar 10. These two indicators show that we
are close to a potential exhaustion
event. My Fibonacci work shows a target
area at the 1726 to 1743 level with the TD Trend Factor target at 1738.
As for the price pulses, I use them heavily in deriving
Elliott Wave counts. This is in addition to D-Wave counts. With the ALPHA-BETA-DELTA-X-Y sequence now underway an
aggressive “sell” trigger is a close below the Beta –X trendline which is shown
in blue. More potential price
exhaustion.
And so we have both the monthly and daily charts urging
caution. I will review the new weekly chart over the weekend. Cheers!
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