Although we finished well off the lows it was another downtrending week in the cash SP500 market as we confirmed the the break of TDST support (horizontal dashed green line) at 1219.50. This strong market decline has been the Z-pulse of the price pulse model. Recall that the Z-pulse often contains the sharpest declines as the Delta-pulse often contains the largest rallies.
Simply put, the market is now in a bear market on this time frame. Note that the low last week came right at the 38.2% retracement level of the 2009-2011 rally. Of interest now are the technical indicators. Compared to the RSI (top pane), the Composite Index (second pane) and Derivative Oscillator (third pane) are threatening to make bullish divergence. Threatening is the key word. These divergences are not yet in place.
Bottom Line: At this point there is no reason to rush into any new judgments abut the medium term outlook. The allocation meter is at +25%.
Note: I will not be posting 18-26 August.
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