Weekly Chart Showing Potential Price Exhaustion

Again the focus is on the potential for price exhaustion; especially now that a TD Sequential countdown bar #13 has printed. I use this event in a conservative fashion – waiting for a price flip to trigger a “sell” signal. In this case a close next week below 1680.19 will do the trick. To be balanced we should also point out the associated “stop loss” level of 1737.48. 

The technicals associated with this chart continue to be supportive of potential price exhaustion. Note that even though price is now at its highest closing level, both the RSI (top pane) and Composite Index (not shown) are not confirming. Of course, a continued rally may work off these potential bearish divergences. 

The Elliott Wave count shown is not the TD D-Wave count presented in the recent series of postings. The count shown is based heavily on my price pulse work and you can see two levels of pulses. The bottom line is that we are near the end of a trending impulse pattern from November 2012. Thus we again see potential price exhaustion. Recall that the D-Wave is also indicating pattern completion.

Lastly the Beta-X trendline is shown in blue. This is used as an aggressive “sell” trigger in the price pulse investing scheme. Of equal import is the fact that the rally from the June 2013 low is a Y-pulse which must be followed by a Z-pulse. Oftentimes the most punishing declines are associated with Z pulses. 

With potential exhaustion now showing up at the daily, weekly and monthly levels one should be ready to move to the sidelines nimbly if the sell triggers start to fire.

Potentiality on the Daily Chart

It certainly appears as though the cash S&P500 is now in a wave 5 rally. If that wave count is correct we should be looking for signs of price exhaustion like we did yesterday on the monthly chart. 

The top pane contains the Relative Strength Index (RSI) and the middle pane the Composite Indicator. Although the RSI has eked out a new high the Composite is lagging badly. This is potential bearish divergence. Remember that the Composite Indicator was created to spot those times when the RSI is failing to spot a momentum failure. 

Right now the TD Combo is on countdown bar 12 (shown in the chart) and the Sequential is on bar 10. These two indicators show that we are close to a potential exhaustion event.  My Fibonacci work shows a target area at the 1726 to 1743 level with the TD Trend Factor target at 1738.

As for the price pulses, I use them heavily in deriving Elliott Wave counts. This is in addition to D-Wave counts. With the  ALPHA-BETA-DELTA-X-Y sequence now underway an aggressive “sell” trigger is a close below the Beta –X trendline which is shown in blue. More potential price exhaustion.

And so we have both the monthly and daily charts urging caution. I will review the new weekly chart over the weekend. Cheers!

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.

Ending The Month Today

The cash S&P500 continues to be involved in a fourth wave pullback. I still think we will get a rally to a new high (wave 5) that is accompanied by another bearish divergence with the RSI/Composite and a DeMark exhaustion signal. Right now the TD Combo is on countdown bar 11 (shown in the chart) and the Sequential is on bar 9. Such a high would then have to be placed within the larger price structure. At the close of trading today we will have a new monthly chart to look at!