Once again, the S&P 500 (SPX) is playing with the knife’s edge with TD Sequential. A final 9 count may or may not record today. A close above SPX 1592.27 will negate the TD Buy Setup and therefore, projecting market direction will be more of a challenge. If the 9 count stays active with a close today below SPX 1592.27, then the TD Buy Setup will not be ‘perfected’ and the possibility of another lower low exists after the market finishes pausing in a range. In the event the four hour timeframe does not finish a 9 count today, it will re-shape the daily counts. Firstly, an initial close below the TDST level (1582.77) which is reversed the next day erases the bearish overtones. Secondly, a close tomorrow, Wednesday, above SPX 1588.19, will negate the current TD Buy Setup count. The message the market is saying is that selling pressure is not strong enough to record a proper TD Buy Setup count and removes a key bear component. Lastly, there is a clean Elliott A/B/C pattern which gives some credence to a two-way market. The chart above is SPDR S&P China ETF (GXC) which will serve as a proxy for the Shanghai Composite. Tom DeMark called a 13 count TD Combo Buy on the Shanghai Composite last Friday but the GXC daily chart shows it is near price exhaustion with a possible 11 count TD Buy Countdown today. TD Combo Buy will likely remain at 11 count today as well. On the weekly chart, the count is on a 8 count TD Buy Countdown competing with TD Buy Setup currently on bar 5. All in all, there is some wiggle room to the downside although it is in the late stages. Note the 61.80 TD Trend Factor price objective. DeMark relies on TD Trend Factors a lot and I suspect that had much to do with his decision to call a bottom on the Shanghai Composite last Friday.
If the market loses the TD Buy Setup count today on the four hour chart, then trading opportunities will go two ways. If the daily price flips to bullish tomorrow with a close above SPX 1588.19, that will serve as further confirmation for a choppy market. The long shot is the market makes new highs but I do not see that on the horizon. I am going to continue the path of the four hour TD Buy Setup through completion but I am picking and choosing trades. (updated intraday)