Weekly Chart Remains Bearish

This chart remains bearish. Here was the three step process that culminated in a bearish rating:

1) A TD Sequential countdown bar #13 on August 2,

2) The cash S&P500 had bearish divergence confirmed between price and the RSI (top pane) on August 9, and

3) A price flip occurred on August 16.

The associated “stop loss” (or risk) level is at 1737.48 (horizontal cyan line).

On this chart, the next bearish development would be to confirm that the August 2 high also marked the end of the green level Y pulse (and hence wave 5 in the trending impulse pattern from the November 2012 low). Currently it would take a move below the June 2013 low to get that confirmation. However; an “early warning” signal for this event would be a close below the Beta-X trendline shown in blue.

Finally, note that the June 2013 low must still be broken in order to show the TD D-Wave Triple Three count (presented in the recent series of postings on waves) as complete. Please note that the wave count shown on the chart is not that D-Wave count but instead one based heavily on my price pulse work. I use the D-Wave count in a corroborating role.

Now or Never for Triangle Scenario

And so the daily chart remains bearish. If there is to be one last, brief pop to the upside it is now or never as it looks like the contracting triangle possibility is about played out. Keep in mind that any such fifth wave up would probably complete the TD Sequential countdown which has been stuck on bar #11 since August 2. Not only is time running out, but the short-term bullish technicals that existed at the beginning of the week (see August 13th posting) have evaporated. In sum the upside, at best, continues to look very limited.

Weekly Chart Just Needs a Price Flip

The technicals associated with this chart continue to be supportive of potential price exhaustion since we now have an actual bearish divergence between price and the RSI (top pane). This is particularly of interest since we have a TD Sequential countdown bar #13 in place. Now I am waiting for a price flip to trigger a “sell” signal. In this case a close next week below 1692.09 will do the trick. To be balanced we should also point out the associated “stop loss” level of 1737.48.

The Beta-X trendline is shown in blue. This is used as an aggressive “sell” trigger in the price pulse investing scheme. I believe we are very close to completing an Alpha pulse (at the blue color level). If so, the conservative “sell” signal would be for a close below the previous Z pulse low. This is also the low that must be broken for TD D-Wave to show the Triple Three count presented in the recent series of postings as complete. Please note that the count shown on the chart is not that D-Wave count but instead is based heavily on my price pulse work.

With the daily chart now bearish, the weekly close to flipping that way, and potential exhaustion showing up at the monthly levels one should be ready to move even further to the sidelines as far as the cash S&P500 goes.

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!

Price Waves #2 - Quarterly Data

Looking at the DJIA from an objective Elliott Wave view:

Starting from the 1974 low of 570.01 (which was a 48 period low) which was identified as the last (Wave 2) low on the next higher time frame (yearly chart):

1. H greater than 12H: 1976.3.

2. L less than 7L: 1977.4. This means that W.1 up ended at the 1026.26 high of 1976.3.

3. H greater than 20H: 1981.2. This means that W.2 down ended at the 729.95 low of 1980.1.

4. L less than 12L: 2002.3. This means that W.3 up ended at the 11,750.28 high of 2000.1.

5. H greater than 33H: 2006.4. This means that W.4 down ended at the 7197.49 low of 2002.4.

6. L less than 12L: 2008.4. This means that W.5 up ended at the 14,198.10 high of 2007.4.

7. H greater than 7H: 2010.4. This means that W.A down ended at the 6469.95 low of 2009.1.

8. 2007.4 high is exceeded: 2013.1. This requires that the W.4 low be moved to 2009.1 since the model requires an A-B-C after a five wave impulse.

A. The chart shown is of the cash S&P500 but is similar to the DJIA.

B. Note that a complete five wave impulse from the 1974 low, which would compose the larger Wave 3, is not yet complete. This meshes with the fact that the yearly chart (last posting) showed the larger Wave 3 not yet completed.

C. The A-B-C pattern from 2000 is either an Expanded Flat or the first three legs of an Expanding Triangle. The difference between the two is that the third leg (down into the 2009 low) would be a five wave impulse in the Expanded Flat scenario but a three wave corrective pattern in the Expanding Triangle. To distinguish which pattern is forming I will take a look at the weekly chart in my next posting.