Sat 7/24. Re-evaluation.

(Update Mon 9:45 AM)
I am bumping the LDT count down in preference. My lines indicate that SPX is bumping into the max upper line of the LDT, but I'd say that makes it more of a channel than a triangle and wave 4 is longer than wave 2 in terms of points which is not a S2EW rule but goes against an EW guideline. I am not eliminating the LDT count becaise it may be useful as a channel or could evolve into an expanding LDT.

The 1-2-1-2 count is not technically eliminated until 1131 is surpassed, and the charts show more of an ABC look now from 1011, so I am keeping this count. I also see a potential EDT 5th of C into this morning's high, but it could admittedly be 1 of 3/C up (or even a well-disguised 1-2-1-2-1-2 as EDTs sometimes are) so caution is advised against shorting until the SPX daily trend turns down. Also, this wave (ii) has taken longer than [ii] and is slightly longer than [ii] which makes it unlikely. So, once again, I am going to bump this count down in preference.

That brings my ABC/WXY count to 1011 (not depicted but mentioned as count #3 for a while) to the forefront. However, I'm not going to call that my preferred count yet until I see a little more SPX action and have time to re-evaluate the larger counts. For now, I'll rely on the System for guidance and reserve EW opinion for more data. Good luck.

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(Update Mon 9:32 AM)
All profit taken 1/3 @ 1092, 1/3 @ 1099, 1/3 @ 1104. Total profit 1.6% basically matching the loss in the last trade. SPX may continue higher to our original target near the 200dSMA, but NYAD tells us the risk is flat -to-down today. We may re-enter long when the rules allow us.
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(Update Mon 9:22 AM)
Active SPX signal: BUY signal from 1081.

Hourly trend: Up with support at 1090
Daily trend: Up with support at the 20dSMA at 1069ish
Profit targets: 1/3 @ 1092, 1/3 @ 1099, 1/3 @ 1112 (changed to 1104 Monday)
Trailing stop: 20dSMA
Last signal: Loss. Sell signal at 1059 on 7/20 gap down. Stopped out at 1076 by rule. Total loss 1.6%. 15 wins, 2 losses, 3 draws since 4/26.

System Notes:
Small NYAD change at an extreme again means we should take profits earlier than 1112. I'd recommend any new high this morning at 1104-1105.
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My 2 preferred counts were pushed to the edge on Friday and possibly beyond in terms of price and time. So, it looks like SPX intends to test the 1131 pivot over the next couple weeks. But, I will re-evaluate by late Sunday night. For now, I want to muse about a couple things.
The US is a service-based consumer-led economy. Over several decades, manufacturing has shifted to lower cost countries, and as those countries grew their infrastructure, labor qualifications and trustworthiness, other industries from customer support to software development also shifted. Many people throw around the statistic that 70% of the US economy comes from consumer spending, and my guess is a fair portion of the business-to-business, government and foreign spending is driven indirectly by consumer spending. We are at the point now where myself and many others I talk to are telling their children to avoid debt buildup such as through over-priced education, get a degree in a field that cannot be exported and of course choose something you like. So, I believe the US trend towards consumer and service is a self-reinforcing loop which will continue until something fundamental changes such as the Fair Tax, strong penalties for overseas revenues and investment, strong tariffs or labor costs cut in half.

With that in mind, the long-term direction of the economy should be driven by service-based consumer trends. Here are the fundamentals facing consumers for 10-20 years to come.
1. Lower pay on average inflation-adjusted. The trend toward lower pay is a natural part of globalization, outsourcing, employment competition etc. State and local govt pension and debt funding problems with lower tax revenues will continue to impact wages, retirement fund and benefits.
2. More conservative lending due to tighter credit standards, lessons learned and less leverage.
3. More conservative debt-based spending on credit cards, HELOCs etc due to peak credit, bad credit scores, bankruptcies/foreclosures and a changed mindset about lifestyle.
4. Steadily declining demographic spending as baby boomers leave proven peak-spending years and enter the downhill slide of making less money and selling stocks & bonds until they require financial help from their younger family members. Sure, some will work longer stealing jobs from teens or middle-age folks but most won't or can't and even if they do they are typically less productive, and keep in mind people are living longer.
5. Declining government stimulus in the years ahead. Most people know social security, medicare, benefits and pensions are going to go through major overhauls in the coming years to the detriment of consumers. The government will keep deficits high for years to come but the money spent is unproductive, biased toward the banks, rich and large corporations and comes at a cost of credit-worthiness, pulled-forward demand, speculation, real inflation, higher interest payments and ultimate potential sovereign failure.
6. Real estate decline. Foreclosures are just ramping up in 2010 and due to ARM resets and lagging commercial effects are not expected to peak until late 2011 or 2012. Even respected services like Case-Shiller are predicting stable to 10%+ lower prices from here.

Let's see. Lower pay, fewer loans, more frugal spending, demographic decline, failing government stimulus and falling real estate values. Not a good formula to increase consumer spending. Of course, maybe job pay merely stabilizes while the government forces ill-conceived loans, temporarily extends tax cuts and supports more bad home loans. Maybe the impact of real estate foreclosures and prices are aided by some new government program and maybe more baby boomers will work longer than I think. But, it's hard to see anything more than status quo and easy to see a dramatic drop in consumer spending, because those 6 trends are massive and certainly difficult to turn quickly. That is why long-term (beyond the next 6 months) it is difficult for me to fathom a strong US economy and thus it is hard to imagine a strong US stock market although big cap stocks and certain specialty stocks may be impacted less by the US economy due to emerging economies.