A Weekly Price Flip

The most significant development since my last posting was the price flip on the weekly chart. This triggered the pending TD Combo sell signal (see posting of 3 June) AND the more recent TD Aggressive Sequential sell signal made the week of May 31. With the weekly now on a “sell” my exposure to equities has been duly lightened.

As far as the daily chart goes (pictured above) not much has changed. We remain on bar 12 of an aggressive TD Sequential sell countdown. Please note that bar 13 can only form after a high greater than 1660.06. We also held above the Beta-X trendline on June 13 and TDST support has yet to be challenged.

Signals and Evidence

We have now reached bar 12 of an aggressive TD Sequential sell countdown. Please note that bar 13 can only form after a high greater than 1660.06.

Going forward, besides watching the aggressive sequential just mentioned, there is the Beta-X trendline and TDST support to watch. A confirmed, validated break of these levels would; of course, be bearish.

From a wave perspective … A move to a new high means that the action from May 22 is wave 2 in an upward trending pattern. A break below the April 18th low (1536.03) would imply that the rally from the 2009 low is complete as the “D” wave of an Expanding Triangle.

On any timeframe you can also use the RSI as a trend indicator. Right now the monthly, weekly and daily charts are all in uptrends. I remain wary that the rally from 2009 is complete but need more bearish evidence (as outlined in this post) before committing to that view.

A Note on Daily Chart Technicals

Previously I have shown that the monthly and weekly charts of the cash SP500 are flashing pending DeMark “sell” signals. How about the daily? Besides the non-Demark bearish RSI/Price divergence (May 21) there have not yet been any bearish DeMark signals in the studies that I follow. Closest to triggering would be a confirmed and validated break of TDST support (dashed green horizontal line on the chart at 1582.7) and the completion of an “aggressive” TD sell Countdown (which is on bar #10 as shown). Of course, to finish the sell countdown would require a bounce higher.

Another item of note on the chart is the upsloping blue trendline. It is the called the "Beta-X"  trendline since it was formed by the Intermediate-Term Price Pulses of the same name. In price pulse theory a confirmed and validated break of that line is a sell signal.

If the rally from the 2009 low is actually over we should start to see more and more technical sell signals actually trigger over all time frames as we move forward.

A Weekly TD Combo sell

In my last posting we took a look at the DeMark technical position of the new monthly chart. Let’s do the new weekly as well. In this instance we see that a TD Combo 13 sell signal was generated on May 10^th. TDST support is at 1398.11 (dashed horizontal green line).

I use this signal in a conservative fashion – to me it is not activated until we get a price flip. For that to occur we need a close this Friday (June 7^th) below 1633.7. On the other hand, this sell signal would be negated on a confirmed, validated break of the 1655.81 level (shown by the horizontal cyan colored line). Breaks of that line during the weeks of May 17^th and May 24^th were subsequently invalidated. Last week’s break will be invalidated on the open today, and so the Combo “sell” signal is still in play.

Elliott Wave - CRB Index (Monthly) - 1 Dec 10

Today begins a series on the Commodity Research Bureau (CRB) Index. After the huge decline from July 2008 to February 2009, the index has recovered in (so far) three waves. The next logical target is just above the market at the TD Trend Factor (purple line) level of 325.74. A fibonacci level is also in this area. Tomorrow I will take a closer look at the move up from May 2010 using a weekly chart.

Time to Step Back -- Quarterly Chart Review

On the quarterly chart of the cash S&P500 we had a very strong up trending bar …. That makes two in a row from the recent low of 666 set in March 2009. Notice how we were able to keep contact with the Long (green) moving average at the low. Since the low the up move continues to look like a bear market rally.

The only positive signal at the low (in the technical indicators I follow) was the TDPOQ on an 8 period TD REI which turned positive when price went above 956.23 in July. Without confirmation I consider that as indicating an oversold counter-trend rally. The REI now indicates that the oversold condition has been relieved and at this point the market is still in the process of determining what the demand level is for stocks is after the huge decline of 2008.

There is a broad area of overhead resistance from 1120-1170 (50% Fibonacci retracement level, previous TDST Support and the Medium (blue) moving average). Above that is 1225-1240.

Bottom Line: The quarterly chart indicates that the bear market rally from March is maturing and that long-term investors should not yet be worried about “missing the bottom”. At the same time it certainly is not inviting anyone to go short. The battle for the rest of the year may very well be the 903 level. If we close above that value at the end of the year the odds of a significant new low become quite low and a double bottom around 666 becomes more likely.

Looks Like th Correction is Underway

Yesterday’s down trending day in the cash S&P500 has brought the index down to the short moving average (solid red line) at 993. This price action has broken and qualified the TD Demand Line (up sloping dashed green line). Confirmation today requires that we close lower than 1004.41 and trade below 992.40. Such confirmation projects 982.87, coincident with a Fibonacci level and should be viewed as the next level of support. Below that lies 961 (Fibonacci and TD Trend Factor).

Bottom Line: I think the evidence favors the view that the pullback associated with the Level 3 Beta pulse (see the July 25 post) is underway. I believe that; as a minimum, 961 will be hit; TDST support (875.32) will hold and that the correction will be complete no later than September 2. After that the rally resumes. But first this correction!

Weekly Update

A downward trending week on the cash S&P500 has triggered several negative events. After breaking through TDST Resistance at 890.4 the week ending May 8, the break was not qualified as we failed to make a higher high this week. The S&P also negated the previously in-force TD Supply line bullish price objective by breaking below the TD Demand line this week at 895.42. We will qualify a price projection to 837.81 by breaking below 878.94 next week.

The weekly TD REI (top pane of today’s chart) signaled a “sell” by dropping through 879.21.

Bottom Line: I believe that a deep retracement of the rally from March 6 has begun, but continue to think that the lows for the year (though perhaps not the bear market) are in.

From Where Do We Bounce?

The cash S&P500 formed a downtrending price bar Wednesday as the L1 Beta pulse continues to unfold. From a timing perspective Beta has a 72% chance of completing by the end of today, so it is time to watch for a bounce. Whether that bounce can reach for new highs or not will tell us a lot about whether the bull run from March 6 is truly ended.

The first support level beneath the market is at 878. Below that 868-870; this encompasses the 23.6% Fib retracement and old TDST resistance. 870 is also in opposition to the 930 high. Then note the medium moving average at about 860 and the TDST support line at 847.

Even if the move up from March 6 eventually goes to new highs we have additional evidence that the first swing has topped -- the fact that yesterday closed at a level less than the close 7 bars ago. This is a TD Wave technique. The experimental trade position remains short from 897.34; stop & reverse at 930.17.