Thursday, April 17, 2014

MTU Weekend Ed. - No bearish confirmation (T+1), but at resistance (4/17/14)

This past week was the first week after the "timed top", the T+1-th week. As we observed in It's TIME(T-0), but at potential support (4/11/14), "we look for a convincing breach of support for bearish confirmation and also entertain the possibility of an immediate new high." and "odds appear to favor a new high, perhaps allow SP500 to complete a potential ending diagonal triangle off the October 2013 low, which is suitable for a top."

Price action this past week did not offer a bearish confirmation, leaving room for the ending diagonal triangle which requires a bullish confirmation (Chart 1). In the meantime, we note a few potentially bullish vs bearish technical factors below. 

[bullish] A failed head-and-shoulders pattern (Chart 2). After briefly dipping below the neck line, SP500 rebounded and regained prior range. Such price action is likely bullish and hints at a new high beyond 1920.

[bullish] The advance-decline line on SP500 is now leading the SP500 index, making an all-time high following the recent rebound in stocks (Chart 3). This counts as another hint at a new high.

[bearish] Price is at near term resistance (Chart 2).

[bearish] The sell-off from the nominal high in SP500 may be a (truncated) leading diagonal wave 1/A-down. A wave 2/B rebound could be nearly over (Chart 2, red count).

Let's see now the market delivers.