We Bide Time With an Inside Day

The cash S&P500 bided its time yesterday by forming an “inside” price bar. As there was no follow through from Monday we failed to confirm the break above the TD Supply Line. Odds favor the view that a short-term price pulse high was made Monday and that risk is to the downside until December 2. The positive reversal in the RSI has an open upward price projection of 1114.46. I will be watching closely to see whether it gets filled or not because a failure would have longer-term bearish implications.

Bottom Line: Still neutral but willing to consider a short-term long position if we do in fact pullback into next week. Otherwise I am willing to consider turning bullish on a close above the November 16 high.

I don’t plan on posting over the holiday weekend (Thanksgiving in U.S.). Next post on Monday morning. Cheers.

*NEW* Technical Analysis of Chart positions for longer-term positions:
Dollar Index: Long from 75.32; stop 74.67 (weekly chart on perfected buy setup). Time is running out for this market to move; stops tightened.
World Gold Index: Yesterday’s price action negates the view presented yesterday.

Waiting for initial signals on the following charts: 10 yr Bond Yield,
Cash SP500 and the CRB Index.

Now we Need to See Some Follow Through

The market gapped higher by a remarkable amount yesterday, rallied to almost a new high and then fell back towards the close. It was enough to qualify a break of the TD Supply Line. Now the bulls need to produce some follow through. If they can’t then the odds would favor the view that a short-term price pulse high is in and the market has entered a decline which should complete by December 2.

Also of note was that yesterday’s rally did create a positive reversal in the RSI. The upward price projection is 1114.46. Let’s watch and see whether it gets filled or not because a failure would have longer-term bearish implications.

Bottom Line: Still neutral but willing to consider a short-term long position if we do in fact continue to pullback from yesterday’s high. Otherwise I am also willing to go consider turning bullish on a close above the November 16 high.

*NEW* Technical Analysis of Chart positions for longer-term positions:

Dollar Index: Long from 75.32; stop 74.10 (weekly chart on perfected buy setup).
World Gold Index: Would close longs on a close below 1145.40.

Waiting for initial signals on the following charts: 10 yr Bond Yield,
Cash SP500 and the CRB Index.

Will the Next Push Up Fail?

Yesterday I ended the analysis of the weekly chart by stating “Perhaps the best interpretation is that although one can’t claim the rally from March is ending there is concern of a decent pullback.“ This is reflected in the daily chart with a decline in the cash S&P500 over the last few sessions responding to the perfected TD Setup of 11/17. On Friday we finally got a price “flip” (close less than the close four sessions earlier) to confirm that the pullback is underway.

But how long will it last? Friday’s price bar did hold the short moving average and, if it marked a short-term low, a price pulse high is due over the next two sessions. However, because of the higher level price pulse configurations I believe that this push up will fail and be followed by another decline which completes by December 2. That pullback may be worth buying.

Bottom Line: Still neutral but willing to consider a short-term long position if we rally here and then pullback again. Otherwise, if wrong in my call for a failure, I will also consider buying a breakout above the November 16 high.

*NEW* Technical Analysis of Chart positions for longer-term positions:

Dollar Index: Long from 75.32; stop 74.10; weekly chart on perfected buy setup.

Waiting for initial signals on the following charts: Gold Index,10 yr Bond Yield,
Cash SP500 and the CRB Index.

Weekly Chart Review, November 22, 2009

Although we made an up trending (higher high and higher low) price bar on the weekly chart of the cash S&P500 it doesn't inspire much bullish confidence. It was a spinning top candlestick with a long upper shadow. When seen at price highs these are indications that the trend may be stalling. Additionally, we made a bearish divergence between price and the RSI. However, against this bearishness we must admit that we keep making higher highs and that the DeMark indicators have not signaled exhaustion of the up trend.

We opened above both the TD Trend Factor target of 1079 and the TD Supply Line (down sloping dashed red line) and then had some follow through on Tuesday which qualifies the breaks. We now need a new high this coming week to confirm them. A failure to confirm will leave us with failure at the TD Trend Factor target, continued bearish RSI/price divergence, and an open downside price projection of 987.51, which is below the critical monthly chart value of 1019.95. 987.51 also coincides with a 50% retracement of the move from the TDST support line and is where the medium moving average is headed.

Bottom Line: This week’s closing price is only 3.7 points above where it was five weeks ago. What does the weekly chart say about this (essentially) sideways moving price action? Not much. Perhaps the best interpretation is that although one can’t claim the rally from March is ending there is concern of a decent pullback (987 area). I will explore what the daily chart “thinks” of this possibility tomorrow.