The S&P held above 1023-1022, so the Elliott Wave rally pattern from the August 17 low remains uninterrupted. However, hourly momentum continues to deteriorate, suggesting that the index is in need of a breather. Thus, we are going to raise our short term benchmark a bit, to 1027-1026. A break of that level would be hard evidence that the rally of the last six days has ended.
That said, the daily Coppock Curve momentum indicator has a bullish bias for 13 of the 24 S&P industry sectors. While that is barely a majority, we do think that this indicator will be constructive for most groups until around September 8. This, plus the fact that the weekly Coppock (i.e., intermediate momentum) is also constructive for most groups and many indicators have confirmed the rally (even as sentiment shows a fairly high level of skepticism), suggests that higher rally highs will follow a coming pullback.
S&P 30-Minute HLC
Chart and Fibonacci resistance in the 1007-1048 range has already proven itself. However, we expect that the rally from August 17 will eventually break out through this range. That is because a rally from last Monday’s low would be 61.8% of the prior July-August uptrend at 1070; equality would imply further strength toward 1127 (which is also a 50% retrace of the entire 2007-2009 decline).
On another note, the always astute media attributed some of Tuesday’s enthusiasm to the uptick in consumer confidence. That “reason” was probably as misplaced as was the prior month’s pessimism following a “surprising” downtick. Nothing goes straight up (or down); even strong rallies have pullbacks along the way. The bottom line is that even a modest further gain next month will generate a P&F “buy” for consumer confidence.
No comments:
Post a Comment