The markets recorded a daily bearish harami candle yesterday but just as every other bearish candles of late, equities cannot follow through to the downside. At this point, a perfected 9 count is still pending on the four hour time frame for the S&P 500 (SPX). This requirement will be met when the SPX at least matches the prior high of 1661.49. The intraday high so far is 1660.74 which is close but technically does not qualify. Here are the weekly TD Sequentials for the major indices expanded out to include 2012. The monthly counts can be viewed from the May 1st post. The SPX recorded a 13 count TD Combo Sell last week and the Nasdaq (COMPQ) will record a TD Combo Sell this week. The Russell 2000 (RUT) recorded a 13 count TD Combo Sell two weeks ago and if the market still has spark, TD Sell Countdown is two weeks away. The confluent nature of all timeframes suggest price exhaustion is in the eye of the storm.
Back to neutral again and the game plan going forward is I’m giving the SPX the benefit of the doubt and expect the four hour TD Sell Setup to follow through and pick off the old 1661.49 high. I will consider it the last high bar and will seek out a reversal late today or next Monday. If the high has not been taken out by the last hour, I will flip back to bearish just by concluding the market is following the same script as yesterday where it spent much of the day in sideways mode before the sell orders were invoked. (updated mid-trading day)