After all was said and done on Thursday there was little change in my view of the market. Yesterday's low was still above the risk level of the recently completed daily buy setup (horizontal dashed cyan line at 1254.24) and we still have developing bullish divergence between price and the technical indicators I track. Today I show the Derivative Oscillator, which has been rising since the end of what Chuck is labeling wave 3. Does this mean the market must rally? Of course not, as the last few days have amply illustrated. However; I still think a rally is coming before we break below the March low - and time is running out.
Perhaps the biggest change in the chart is that the Supply line (dashed red line) has readjusted. (Aside: Note how these lines oftentimes parallel one of the moving averages). Any break above that line today (1276.69) will be qualified and may be the first indication that an intermediate term low is in.
Bottom Line: The allocation mix meter is at +50%. My near term scenario assumes that an intermediate term low will be made above the March low and that a rally will then take us back above the 1344 level. However; I remain quite concerned that the high may already be in for the rally from the 2009 low.
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