Can't Count the Bulls Out Yet

Has the rally from the 2009 low run its course? Or can the bulls keep the party going? Two points for the bullish case:

1) The market reacted at, and bounced strongly higher off of the Beta-X trendline (see last posting).

2) The weekly chart did not produce a “price flip” to trigger the pending TD Combo sell signal (see posting of 3 June).

Now then … will the bulls be able to drive the market to a new high from here? Or will it just end up being a failed retest that triggers a daily aggressive TD Sequential sell signal (see last post)?

I remain very cautious on equities as I await/watch for the result of the retest of the May 22 high.

A Note on Daily Chart Technicals

Previously I have shown that the monthly and weekly charts of the cash SP500 are flashing pending DeMark “sell” signals. How about the daily? Besides the non-Demark bearish RSI/Price divergence (May 21) there have not yet been any bearish DeMark signals in the studies that I follow. Closest to triggering would be a confirmed and validated break of TDST support (dashed green horizontal line on the chart at 1582.7) and the completion of an “aggressive” TD sell Countdown (which is on bar #10 as shown). Of course, to finish the sell countdown would require a bounce higher.

Another item of note on the chart is the upsloping blue trendline. It is the called the "Beta-X"  trendline since it was formed by the Intermediate-Term Price Pulses of the same name. In price pulse theory a confirmed and validated break of that line is a sell signal.

If the rally from the 2009 low is actually over we should start to see more and more technical sell signals actually trigger over all time frames as we move forward.

A Completed Price Pulse on the Daily Time Frame

Although it wasn’t by much, the cash SP500 index slipped below the below the Price Pulse Confirmation Line (horizontal red dashed line at 1623.09) yesterday. This was the second and final step needed to show that the entire move from the April 18th low is a complete Short-Term price pulse/wave. It is a five segment Trending Pattern and is either ALL or PART of the Intermediate Term pulse/wave that also started on April 18th. In wave terminology, the short-term wave is either all of intermediate term wave 5 or just the first part - wave 1 of 5.

Of course the answer to the question – all of five or one of five – is critical to the future course of prices and that is one reason why I wanted to look at the technical status of both the monthly and weekly charts over the last few postings. Their potential weakness leads me to favor the more bearish scenario that the rally from the 2009 low is complete. Currently, the pulses themselves will only confirm that opinion if price were to drop below the April low. For me, as an investor and not a trader, it is time to be very wary of equities.

A Weekly TD Combo sell

In my last posting we took a look at the DeMark technical position of the new monthly chart. Let’s do the new weekly as well. In this instance we see that a TD Combo 13 sell signal was generated on May 10^th. TDST support is at 1398.11 (dashed horizontal green line).

I use this signal in a conservative fashion – to me it is not activated until we get a price flip. For that to occur we need a close this Friday (June 7^th) below 1633.7. On the other hand, this sell signal would be negated on 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 17^th and May 24^th were subsequently invalidated. Last week’s break will be invalidated on the open today, and so the Combo “sell” signal is still in play.