Thursday’s post had some S&P 500 (SPX) downside targets, most notably the SPX 1590-1600 area. Since the current assesement is for further downside, the chart above has some retracement areas where bears can re-short. A steadfast move above SPX 1670 would require a re-think on the bearish outlook. An Elliott wave one on the five minute chart is at 1672.96. An upside break above that would certainly damage the bear case. Also, DeMark TD propulsion, which determines the probability of higher prices if the threshold level is broken to the upside is sitting at SPX 1671.20. Couple these two together gives traders a defined bull/bear line. A DeMark TD Sequential look at SolarCity (SCTY) and the Market Vectors solar energy etf (KWL). I’m trying to determine if there is enough juice for another higher high for SCTY. Under TD Sequential, it appears it is in the late stages as one more higher high should complete a “perfected” 9 count TD Sell Setup. Also, there is a competing count with TD Sell Countdown currently at bar 7 and could complete in close proximity of the “perfected” TD Sell Setup. The KWL chart has already produced a 13 so the solar group as a whole should be consolidating or correcting. While SCTY can achieve another higher high, it will just be entertainment value as I do not see the risk/reward in it at the moment.
If my assumptions are correct, SPX should see the 1670 area just to reject it and have prices turn south. If the four hour SPX chart shows a TD Sell Setup at the same time, that will help hone in on the potential turn. If SPX consolidates above 1670, that’s a bullish sign, which sounds almost unbelievable. ( updated after close of market )