Thu 9/8/11. Awaiting the speeches.

(Update Thu 9/8/11 2:15PM EST)
The market has likely priced in high odds for Operation Twist, yet Bernanke gave no strong hints for a big stimulus. He only repeated that the Fed is prepared to use various tools at its disposal as necessary. To me, that feeds into the viewpoint that the Fed is more likely to act if the stock market tumbles toward 1000 and less likely to act if the stock market rallies. So, if traders believe that logic, it would seem sensible to sell SPX at 1200-1260 and either buy in the 1100s if one is more optimistic about the economy and Fed or buy in the 1000s if one is less optimistic about the economy and Fed.

SPX traded right down to the 89hEMA at 1186 before bouncing. The 20dSMA, 89hSMA and 38.2% Fib retracement of 1140 all reside at 1179. And, the Friday close and Wednesday open were just a couple points below there. So, bears need to break below 1179 with gusto to take control. If the market doesn't make another major move before today's close, a lot will probably ride on Obama's speech. Good luck.
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System support rose to 1192.83 at the close yesterday. The System went short at 1192.82 this morning with a stop at 1210 (yes, I am trying a looser stop again due to higher volatility and the 1199-1209 Fib cluster and the recent 1208.47 pivot). Be prepared for a whipsaw loss, but there's a good chance SPX is heading to 1231+ in such an event. I'm not sure a big move will take place until the afternoon Bernanke speech and Obama night speech, but, if the wave 3of5of3/C count from 1371 count is alive, we really should get moving down pretty quickly within the next day or so. I say that because 10 out of 11 of the final legs of 8%+ downtrends since 2007 lasted 14 trading days or less. SPX is on Day #6 from 1231. And, unless September 6th marked my cycle bottom, the maximum window for a cycle low ends in 10 days. I mentioned the possible H&S with 1231 as the head, and the right shoulder is now a better match for the 1208 pivot than the 1191 pivot but the textbook target is still 1050ish. On the bullish hand, SPX is now on its 2nd day above the 20dSMA/89hEMA. And today's gap fill may now support a 5-wave rally from 1140, but that's getting in the weeds of the 5min chart and less convincingly on the 15min DRSI chart, so I'm not weighting it heavily. In that scenario, w1=1140-->1164, so w5 should target 1204/1214/1229 followed by a 20-50% retrace. If we have seen 5 waves up from 1140, about the only way I can see an ABC wave 2 within my time window for 3of5 down is if maybe SPX drops sharply and rebounds sharply (but briefly) on either side of the Bernanke/Obama speeches, but that's just a guess. Good luck.