Presenting The July 2013 Chart

Attached is the new monthly bar chart of the cash SP500 (bottom pane). The top pane contains the Relative Strength Index (RSI) and the middle pane the Composite Indicator. Are there any signs of price exhaustion in this chart?

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bearish divergence. Is there anything more substantial for the bearish case?

Of continued interest is the potential 9-13-9 (labeled in black on the chart) “sell” signal generated by DeMark analysis. I use this signal in a conservative fashion – to me it is not activated until we get a price flip. For that to occur in August we would need an August closing price below 1597.57. However, now that price has closed above the “signal abort” level of 1659.11 (horizontal cyan line), a new high in August will abort that signal.

Another DeMark “Nine” is shown in green at the May 2011 high. The subsequent Sequential countdown reached 13 in May of this year. Again, that is a potential “sell” signal if it is triggered by a price flip this month.

The wave count derived from a DeMark-like analysis (see previous price wave series) has a potential Triple Three pattern ending once we complete the final “C” wave up from the June 2013 low.

Finally, the price pulses. A cyclical bear market rally (from the 2009 low) within a secular bear market decline (from the 2000 high) is often composed of an ALPHA-BETA-DELTA sequence. Both the Medium-Long and Medium sequences show us approaching the end of the Delta pulse. More potential price exhaustion.

Potential. Potential. Potential. The monthly chart is screaming “caution” and this is why, as a long-term investor and not a trader, I remain wary of equities right now. But “caution” is not the same as “sell” and so I can’t definitively say that the monthly chart is screaming “get out now.” But I feel like we are approaching the edge of a cliff.