Bulls on the Ropes

After an attempted rally that failed just below the TD Supply line (down sloping dashed red line), prices moved lower to the medium moving average (solid blue line). With a failure to hold above the 1066.71 level the odds of one more push to new highs have decreased quite a bit, but it’s still not impossible. Such a move up will have to occur by November 6 and may wind up being only a failed retest of the current highs.

If I have my level 1 price pulses correct, the Elliott Wave theory based on them says that either wave 3 or C is complete from the March low. If it is Wave C then we have completed a Zigzag pattern. This is my preferred count but either demands that a correction now unfold. D-Wave will show a complete five wave pattern (and hence price exhaustion) only if we close lower today.

Working Road Map: With momentum indicators having failed and the Elliott Wave count showing a possible large Zigzag now complete, I think the odds that a significant top is in have risen substantially. Still neutral (since October 9th). Here is my best guess for what happens over the coming days: The next short-term bottom will lead to one final push up that will most likely fail to make a new high. I am looking for TD Sequential and/or Combo “sell” signals on that bounce to turn me short-term bearish. In the meantime let’s see if the medium moving average or the TDST support line (at 1050.10) holds.