Monday, July 8, 2013

ImageThe ‘dark horse’ rally is currently in play and if there is a derailment, it will come tomorrow. We can view this as an opportunity to buy-the-dip or a resumption of the overall downtrend on the S&P 500 (SPX). The Russell 2000 (RUT) has already made fresh highs. For tomorrow, this is how I view the options that may come. The daily has a TD Sell Setup that will likely record a 9 count tomorrow. A 13 count TD Sell Countdown which has been active since May 14th, has finally met the objectives of price exhaustion today. Furthermore, if SPX trades below 1652.45 today or tomorrow, that would further strengthen the case for some type of selling opportunity  Note that the 1652.45 level is the TDST level derived from the 60 minute, 120 minute, and four hour timeframes and not the daily. Still, it should serve as a good frame of reference. What comes after the projected 9 count is open for speculation. It could create another buying opportunity perhaps to test the 50 day moving average. The impulse move of the RUT supports that. If breadth holds up while the market pulls back, that will give another good indication the market is not done with the upside.

ImageThe RUT daily. Quite a difference compared to the SPX.

ImageImageImageHere are the weekly charts. The Nasdaq Composite (COMPQ) and RUT are decidingly bullish but SPX is lagging.

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The current TD Sell Setup on the daily may be the last chance the bears have to make a stand. Failure there and it is almost certain SPX will challenge new highs. Staying pat for the most part today but preparing to play the short side tomorrow – hopefully as close as SPX 1652.45 as possible. (updated intraday)

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