Yesterday’s power rally did not hold back. It went far further in price than expected, clearly recording a handful of S&P 500 price exhaustion signals – 4 hour TD Sell Setup @9 and daily TD Sell Countdown @13. Now the first set of intermediate duration price exhaustion signals have been met, equity markets are now allowed to reverse. Judging by the high retracement to almost new highs, it is more probable to see further consolidation – possibly with lower lows – but eventually gearing up constructively for another longer term bull move. One outlier is a complex, drawn out topping process, but would require the dynamics of the economic landscape to change and that is not happening yet.
Apple’s earnings are out after the close today and much like the market itself, it is range bound. The magic level as determined by the daily TDST Resistance level at 540 is what Apple needs to break to open the path to 600. There is support for 600 from the weekly charts, as they are indicating a volatility squeeze, providing expectations of a big move. As an aside, Apple is not the same company when Steve Jobs was at the helm and not sure if he would have approved of the candy-colored iPhone 5c series.
S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL
Bearish if SPX closes below 1871.55.
There is sufficient upside to provide price exhaustion as suggested by the TD Sell Setup @9 on the 4 hour chart. The risk/reward is favorable to the downside at this point. A close below 1871.55 is traditionally a reversal day, but a better confirmation is to see the daily SPX price flip bearish.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL
Bearish if SPX closes below 1862.31.
The current counts are indicating the next leg lower is about to commence. There are two competing TD Sell Countdowns from the back to back TD Sell Setups. The first one is the primary count at “13”, which is shown on the chart above. Not shown is the second TD Sell Countdown at “12”. There are certain TD Countdown qualifiers to cancel one of the TD Sell Countdowns, but preference here is to keep counts on both of them.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH
Neutral if SPX closes above 1857.62 and accompanied by either the Nasdaq closing above 4155.76 or the Russell 2000 closing above 1151.81 (updated April 21st).
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).