An area of CAUTION

On January 8th I told you that the market was still bullish, and here we are up at 1493 and the charts are showing caution signals. All the daily charts reside within bull territory, but they are starting to show a couple of cracks. We'll first start with the SP-500 daily chart and where I think we are in the Elliott Wave count.

We are currently within the area where, based on the wave count, there are some solid resistances. If the count is correct a reversal in this area is highly likely.

The daily ADX chart hasn't provided a reliable signal since the buy at 1260, but it would've kept you with the overall trend. The +DI is still moving above it's current uptrend line, but the -DI has been producing positive divergences at the last 3 tops.

The daily MACD is still above it's uptrend line, but tested the longer term negative div line today. Also, the MACD Histo is showing negative div.

RSI above uptrend. When it breaks that uptrend line it will cause a Change In Trend.

As stated above, all of the daily indicators are still in the bull zone, including the swing trend indicator. The Swing Trend Indicator broke above a resistance line and turned full bull mode. It will take a price movement under the 3 and 10 dma's to put it on sell.

A fellow called D2K introduced me to the following chart which I modified to include the ADX for timing purposes. The signal comes once the horizontal line is crossed and then the price puts in a lower ADX reading than the previous day. This has not occurred yet, so it's still on buy (although I wouldn't be buying or adding to my position at the current time).

Next we'll move on to some shorter term charts and some bearish chart news. Once again, it is showing the area where the market should roll over if the count is correct.

Here is my current count on the hourly SP-500 chart.

The ADX has approached an area where the market will generally reverse trend. It's still the same setup, once the ADX gets to either the 35 or 40 mark then prints a lower level issues the buy or sell signal. There is a possibility that the -DI is putting in a positive divergence (which is bearish).

Swinging back out to a daily chart, the MO is putting in negative divergence to the new index highs, which is another reason for some caution here.

Summary:

Daily Trend = Bullish (but I believe caution is warranted here)
Hourly Trend = Bullish, but close to a reversal