The rally I was looking for came. Now what?
Figure 1 shows the possible road map for linear cycle (Hurst methodology). We are looking for a cycle high March 17 +/- 2 trading days. Seasonals and Lucas approaches support March 17 as being a possible high. Seasonally we can expect the S&P to head south to a low, due March 30 to April 3.
Let’s focus on the immediate possibility - the possible cycle high. We had a strong day on March 10. This I was looking for, see ‘Edging Towards a Bounce‘. But the bounce was overdone. It had all the earmarks of a short term move fueled by short covering and weak longs. Rather than the 4% or so directional structure up, we needed to see strong, to and fro price action or a slow trend day. Instead we say a directional move, rotation and a neutral, up close. (Figure 2, 60 minutes, ESM9, day session). In short, we saw what Pete Steidlmayer used to call a ‘P’ short covering profile.. (I prefer to call it an ‘Arrow-Head’ profile since nowadays the Bull pattern is also called a ‘P’ profile).
Today the market opened and appeared to drive up. But the 15-minute Delta chart told me (because of the consecutive auction tops) that the move is likely to peter out this afternoon (EST). The likelihood is the market will form a top today or tomorrow. If today, it will form a little early. Figure 2 shows the Market Delta chart.
What does the market have to do for me to change my mind. A preliminary indication would be seeing today’s bar as a buying conviction bar closing above 741 basis cash. The reason is such a bar would not be in keeping with the ‘Arrow-Head formation’. A confirmatory signal would be a close above 768 (basis cash).
Figure 1 Hurst Channelyze S&P
Chart courtesy of Channelyze Software
Figure 2 60-Minutes S&P
Figure 3 Market Delta 15-Minutes
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