Even though we technically had an uptrending price bar print on the weekly chart of the cash S&P we closed on the low, continuing the pullback/consolidation since the weekly TD Sell Setup was perfected on June 1. Additionally, a technical “sell” signal was given on June 19.
So far from the high we have seen a bearish price flip and a move down to the short moving average over a three week time period. A typical pullback/consolidation runs 1 to 4 price bars after a perfected signal. Since we are at the end of that time period now the question is the same as last week “Will the rally that began in March resume? Or will we have a deeper/longer correction due to the Sell Setup plus technical sell signal? “
Last weekend my answer to that question was “… we will only get confirmation that the uptrend has resumed if we can qualify and confirm a break of the current TD Supply line (downward sloping dashed red line on the price chart).” I stick by that opinion and note that the line was not broken over the past week. It sits at 949.61 this week.
In fact, since the Level 2 “Alpha” price pulse seems to have already topped (on July 1), the odds are very high that we will now break the May 15 low of 878.94. This would be a clear indication that the rally from March has run its course. The first target to the downside would be the intermediate moving average now at 858.
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