Another one of those thingys

The cash S&P500 made high exactly in the area of resistance mentioned in my last post. Accompanying that high was yet another Negative Reversal. The calculations show that the minimum target is 1438.35, indicating a retest of the recent low.

At this point I am counting the move up into Wednesday's high as wave "a". I won't be surprised if the current decline turns out to be the "b" wave in an Elliott Expanded Flat pattern. This interpretation, if correct, would imply a successful retest (even if we do get a slightly lower low) followed by another sharp leg higher before the bear trend continues.

That's Bull!

Yesterday's uptrending day put to bed the RSI question. We now have a confirmed technical "buy" signal on the daily chart. Yesterday's action has also formed a CIT (Change In Trend) in my work at the low. All of this is evidence (if not quite final proof) that the Elliott wave down from the high is done.

Since this wave was a five wave structure we should look for a counter-trend move and then a resumption of the decline. One place to watch for the counter-trend rally to end is at Fib retracements. Yesterday's high almost hit the 50% level and was stymied by our short term moving average (in red). Another key area of resistance is in the 1505 area. Here we find a Fib retracement line, two moving averages and the 180 degree Gann target up from the bottom.

We'll monitor the developments while we sit on the sidelines.

Round and Round She Goes .....

Another day and another sharp reversal. And now, once again, we have a bullish divergence (technical "buy" signal) between the RSI and price. However, there is another potential RSI negative reversal brewing!

The chart at left shows that yesterday's closing price was at a higher RSI level (the upper red line) but at a lower price than on the two previous RSI peaks.

So Tuesday will be another fight between the bulls (RSI bullish divergence) and bears (RSI negative reversal). Who wins? I'll stay out of this fight and watch from the sidelines.

Buy Signal Negated

Easy come, Easy go. The RSI "buy" signal shown last time was promptly negated by the development of a "negative reversal" on Friday.

Thursday was not a very bullish day - volume and price movement were lower than Wednesday, and the "potential" negative reversal was in place. As shown in the chart, the RSI closed at a value higher than that of July 30 even though the closing price of the cash s&p500 was lower. The reversal was confirmed on Friday.

This cancels the previous buy signal. Now, even though the technical indicators are setting up to issue another "buy", we have to wait for that to happen. Buy signal or not, I will not go long -- my methodology will not allow me to go against the "larger" trend which is still firmly down.