SPX Daily Chart - 15 Sep 11

     The bulls continue to press the cash SP500 higher, overcoming key resistance at the 1186 level. Does this mean all is rosy? Not necessarily. Take a look at the composite index (middle pane). While the RSI (top pane) has pushed to a new high here the composite is lagging. Should this turn in to an actual divergence a warning would be given that the bounce/consolidation from early August is complete.
     While we watch those two indicators note that we are now in a delta pulse. Delta should be the strongest upward pulse in a cycle.  If it is not that is another bearish warning. The next upside target area is 1245-47.
    Bottom Line:  Until further evidence develops or we break 1136.07, I think that the bullish potential over the near term should be respected. My mechanical allocation mix meter is at +50%.

SPX Daily Chart - 14 Sep 11

     An impressive showing for the bulls as they were able to push the cash SP500 over, and then close above, key resistance. That resistance at 1186 was composed of the medium (blue) and short (red) moving averages as well as the TD Supply line. There was a downside though: the break was an unqualified one. This means that we need to be suspicious of this being a false breakout.
     So once again we want to see if the bulls can provide follow through to the upside. Their immediate goal is to break 1204.40 to indicate that the delta pulse is underway. The next upside target would be 1245-47. If the bulls can't follow through then we will have to watch what happens at the demand line (horizontal dashed green line).
    Bottom Line:  Until further evidence develops or we break 1121.09 I think that the bullish potential over the near term should be respected. My mechanical allocation mix meter is at +50%.

SPX Daily Chart - 13 Sep 11

     There was follow through to the upside in the cash SP500 yesterday but it certainly was not remarkable. The focus for the bulls (besides seeing more follow through) must be the strong resistance forming in the 1186 area composed of the medium (blue) and short (red) moving averages as well as the TD Supply line. This is formidable resistance and whether it can be overcome may be the tell on whether the consolidation from early August is over or not.
    Bottom Line:  Until further evidence develops, or we break 1121.09, I think that the bullish potential over the near term should be respected. My mechanical allocation mix meter is at +50%.

SPX Daily Chart - 12 Sep 11

     The fight continues over whether the consolidation/bounce is over in the cash SP500. The price action over the last two sessions has confirmed that the alpha-pulse ended at the August 31 high. The price pulse model says that the bulls have most likely failed if we break below the August 22 low of 1121.09.
    If you are bullish near term (like I am) the good news is that the intraday break of the TD Demand line yesterday was unqualified - demand did come into the market at that level. Now we need to see some follow through. Another thing to worry about (besides seeing follow through) is the strong resistance forming in the 1185-1194 area composed of the medium (blue) and short (red) moving averages as well as the TD Supply line.
     I think the fight today will again be over: 1) keeping the daily RSI above the 38 level; and 2) the TD Demand level (upsloping dashed green line). 
     Bottom Line:  Until further evidence develops or we break 1121.09 I think that the bullish potential over the near term should be respected. My mechanical allocation mix meter is at +50%.

SPX Weekly Chart - 9 Sep 11

     Recent review of the monthly chart showed an overall bearish position for the cash SP500 while the daily showed that a choppy counter-trend rally has further to go. What does the weekly chart have to say?
     In my last weekly posting (26 Aug) I stated that an A-B-C or 1-2-3 structure has formed from the May 2011 high. The first two D-Waves (either A-B or 1-2) correspond (in this particular instance) to the x and y pulses shown on the chart. The strong decline from July 8 to August 12 has been with 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. Since the RSI has broken below 38 I favor the bear market 1-2-3 D-Wave count. Is wave 3 in this model over? Technically no. The fourth D-wave can only be said to be underway when we see a high greater than the previous 12 highs.
     The implication is that D-wave 3 has more to go to the downside, and that the price action since the z-pulse bottom is just a bounce or consolidation. Note that the low of August 12th came right at the 38.2% retracement level of the 2009-2011 rally. One week later the RSI (top pane)  bounced off of the level reserved for support in bear markets and the Composite indicator (middle pane) made bullish divergence with the RSI. This is the evidence that supports that a bounce or consolidation is in fact underway. And this interpretation fits the monthly and daily scenarios we have been discussing. The price action in this bounce/consolidation is an alpha pulse on the weekly chart.
     Going forward we can use the price pulse model to gauge when the bounce/consolidation (if it is solely associated with just the alpha pulse) might be over. Right now it would be signaled on any move below 1121.09; which was also important in the daily chart. To the upside I think the short (red) or medium (blue) moving averages is the best we might get before the larger downtrend assert itself.
     Bottom LIne: For this week I think the levels to watch are the long (green) moving average and the Demand Line (dashed green line). Qualified, confirmed breaks of these lines would point to; respectively, either a bounce (vice consolidation) or renewed decline. The allocation meter is at a +50% and I am expecting the August low to give way after this consolidation/bounce completes.