SPX Daily Chart - 19 May 2011

     The cash SP500 market opened higher yesterday, immediately confirming Wednesday's close above the medium (blue) moving average. A pullback then occurred when the TD Supply line was reached, but the bulls regained their legs and managed to close the market above the short (red) moving average. To signal a continuation of this move higher it would be ideal to see that close above the short moving average confirmed today.
     Perhaps the more immediate problem for the bulls is the Supply Line sitting at 1344.58. The only way to get a qualified break today is to open above it. A failure to do so, or a failure to qualify yesterday's close above the short moving average leaves the market vulnerable to the potential negative reversal forming in the Composite Index (top pane). If both price and the index were to turn down today it would mean a likely return back into the blue support box.
     Finally, keep in mind that the market will be fighting over the 1337.38 number today. See the last Weekly chart update for the reason.
     Bottom Line:  The allocation mix meter remains at +100%.  I am still expecting to see new highs before the April low is violated.

SPX Daily Chart - 18 May 2011

     The cash SP500 sold off into the lower support zone (blue box on the chart) on Tuesday and then reversed higher to close above the medium (blue) moving average yesterday. To signal a continuation of this move higher it would be ideal to see that break above the moving average confirmed today. If it is, the next upside event to watch for will be a close above the short (red) moving average.
     There is resistance (in part due to the short moving average) right above the market from 1341-43 this morning and a TD sell setup was completed on the hourly chart yesterday. If this can't stall the price action this morning then I would expect a strong upward day.
     Bottom Line:  The allocation mix meter remains at +100%.  I am expecting to see new highs before the April low is violated.

Chuck's Waves - CRB

SPX Daily Chart - 17 May 2011

     The cash SP500 sold off into our lower support zone (blue box on the chart) yesterday and then reversed higher. Note that the RSI (top pane) has held above the area reserved for bull market support at both the current and mid-April lows. Whether this reversal now leads to a larger rally is the next question. The first step is to close above the medium (blue) moving average.
     Bottom Line:  The allocation mix meter remains at +100%.  I am expecting to see new highs before the April low is violated.

ASIDE: I mentioned my friend who is, in my opinion, an accomplished Elliott Artist. I call it artistry not in a derogatory sense, but because I think it requires a certain amount of creative flair to do it right. I will begin posting his counts (without comment) under the title of "Chuck's Waves". I will start today with the CRB Index.

SPX Daily Chart - 16 May 2011

     Last Wednesday (May 11) we again closed below the short (red) moving average. That break was qualified (confirmed) the following day and by the hypothesis I am testing, this warned that we would see prices below 1332.03 by the end of this week. After an 'inside day' on Friday we got our lower prices yesterday. Now that we've closed below the medium (blue) moving average we need to see if today's price action can confirm that break.
    Price has also made a confirmed break of the TD Demand Line (dashed green upsloping line) which indicates a price target of 1295.71 if the supply & demand situation does not change. Interestingly, this target is above the 1294.7 level we are eying on the weekly chart as ultimate short-term support. Above that level there are two support zones to watch. The first is a fibonacci cluster in the 1324-25 area. The weekly short moving average also lies in this zone. Secondly, there is a support zone in the area shown by the blue box. This includes TDST support, a prior gap, and the long (green) moving average. I expect one of these zones to hold followed by new highs before the April low can be violated.
     Bottom Line:  The allocation mix meter remains at +100%.

SPX Weekly Chart - 13 May 2011

     The situation remains similar to the one discussed in the last weekly post. At this point I still expect new highs without breaking below 1294.7.  Immediate support is at the short (red) moving average. Note that we can not break the Demand Line (upsloping green line) in a qualified manner this week since we closed lower last week. This implies that most traders are expecting that line to be broken. Thus, being a contrarian indicator, it says not to expect follow through to the downside.
     1337.38 is also an important number this week. If we close below that level this Friday then the current sell setup being built we be interrupted.
     Bottom Line: The weekly chart is in a bullish position and the allocation mix meter is at +100%.