Anything Left In The Tank?

For reasons recently stated (see posting of 8/8/13 for example) the daily chart is now bearish. If there is any fuel left in the bullish tank it doesn’t look like a lot. However, it may be enough to produce one more high. That scenario would occur if we have not yet completed the trending impulse pattern from the June 24th low.

Such a scenario would imply a fourth wave contracting triangle as depicted in the attached chart. If correct it means that one last and most likely short, fifth wave up is required. A price projection for such a fifth wave is calculated and is of some interest. We get targets of 1706-08 (challenging the last high); 1718-20 (associated with the risk, or stop loss, level on the TD Combo signal of 1718.66); and 1738-43 (aligned with the next TD Trend Factor target which is shown in purple on the chart).

Keep in mind that any such thrust up would probably complete the TD Sequential countdown which has been stuck on bar #11 since August 2.

We've Flipped

After completing a TD Combo countdown last Friday (shown in the chart), the cash S&P500 has produced: bearish divergence between the RSI and Composite Indicator as well as between the Derivative Oscillator and price, a break in the low level Beta-X trendline, and now a price “flip” (close less than the close 4 bars prior). The daily chart is now bearish. The only good news for the bulls was that we held 1681.86 yesterday. This allows for the possibility that another push higher is still possible before the trending impulse pattern from the June 24th low is complete.

The risk, or stop loss, level on the TD Combo signal is 1718.66. I would not be surprised to see that challenged over the next week or so even if we are at an upward exhaustion point.

Tipping Further ...

After completing a TD Combo countdown last Friday (shown in the chart), the cash S&P500 continues to tip towards triggering the potential “sell” signal on this time frame. With Combo or Sequential I prefer the conservative approach by demanding a price flip. That would occur on any close below 1706.87 today.

With yesterday’s decline we now have actual bearish divergence between the RSI and Composite Indicator as well as between the Derivative Oscillator (not shown) and price. Yesterday also produced an aggressive “sell” signal in the price pulse system as the Beta-X trendline was broken. Again, being conservative I want to see the Y pulse shown complete. This would currently take a move below 1681.86.

 

Bottom Line: A price flip today turns this chart bearish while a move below 1681.86 would show the trending impulse pattern from the June 24th low as complete.

Closer ....

The cash S&P500 completed a TD Combo countdown last Friday (shown in the chart) while the Sequential is on bar 11. We are now quite close to triggering this potential “sell” signal at this time frame. With Combo or Sequential I prefer the conservative approach by demanding a price flip. That would occur today only with a close below 1685.73. If we continue higher my Fibonacci work shows a target area at the 1726 to 1743 level with the TD Trend Factor target at 1738.

As shown in previous posts, the potential bearish divergence between the RSI and Composite Indicator continues. Today I want to show yet another developing bearish divergence – this time between price and the Derivative Oscillator (top pane). Note the bullish divergence that accompanied the price low in late June and compare that to the bearish divergence developing now. This can’t be good for the longevity of this rally. 

As for the price pulses and wave count there are no changes since my last post on the daily chart. And so we have the monthly, weekly and daily charts all on the verge of declaring an upside exhaustion event. Caution!