Perfect Buy formed for SPX and DJI, is a reversal really in play?

I like to provide a quick follow-up to my post yesterday titled: Are the stars aligning for a SPY reversal today?

SPX chart with TD9 buy

DJI chart with TD9 perfect buy

What Happened yesterday w.r.t TD9 sequence indicator?

Yesterday we see $S&P 500(.SPX)$ and $DJIA(.DJI)$ forming the perfect buy with the Tom Demark 9 indicator sequence and successfully rebound (see charts above). However the $SPDR S&P 500 ETF Trust(SPY)$ and $NASDAQ(.IXIC)$ is one count behind and the TD9 failed to form up with the rise in the indices (see charts below).

SPY

My Take on the reversal

SPX and DJIA are the main indices, we should of course take reference from it and not from SPY. However I have observed for a few times, the perfect buy should formed on both SPX and NASDAQ to give a high probability of a bullish reversal in the market. The reversal also took place at a rather high RSI of 40plus, so I am not too sure if this reversal is indeed a real one. Let’s monitor how if the reversal is strong (if any) for the next few days. I am ok to close my positions later and keep my money on the sidelines for now. Let’s see if the Federal Reserves commentaries will provide any positive news.

Recap on the TD9 Set Up and Trading Signals

The TD Sequential is a technical indicator that uses price and time to identify potential trend reversals in the market. In a bearish trend, the TD Sequential plots the number ‘1’ if a candle closes lower than the close of a candle four periods ago. This rule is applied for all the following candles until the pattern is cancelled by a candle closing higher than the candle four periods earlier. The TD Sequential pattern continues until the number ‘9’ is plotted on the bottom of a candle, indicating a potential reversal point. For the perfect buy setup, the lows of the 8th and 9th candle must be lower than the lows of the 6th and 7th candle. Vice versa applies for a bullish trend and perfect sell setup.

Once a TD Sequential pattern is completed, there is a high probability that the market will reverse in the opposite direction. The number ‘9’ is ideal for entering a trade opposite to the established trend, with the stop-loss above or below the highs/lows of the 9th candle. If the pattern plays out, the pullback will be significantly strong during the first 3-4 candles after the confirmation of number ‘9’.

Thank You