(Update Fri 4/13/2012 3:50PM EST)
Lots of chop. The only thing I feel comfortable saying is that the 1357-->1388 rally looks corrective and the drop this morning looks impulsive followed by a corrective rally. That continues to favor bearish action, but corrections can be complex, so, while a Monday morning gap down would fit my pattern well, another rally to 1378-1388 is not out of the question before we get the next leg down to sub-1357. SPX is only 1% from 1357 now but TRIN and VIX and 1370ish support could allow a decent bounce if 1370 holds into the close. Tough call. Next week is supposedly a very good week historically after April 15th taxes and more so with OPEX, so any early week weakness is likely to be bought. Good luck and great weekend!
(Update Fri 4/13/2012 10:35AM EST)
Wedge/channel broken at 1376. Apple broke down too. An SPX double ZZ is still technically possible back to 1388+, but my sub-1357 5th wave scenario into Mon/Tues is looking very good. I expect a decent 8-10pt bounce imminently but the trend is still down so I wouldn't get caught long until SPX makes a new low or holds 1400.
(Update Fri 4/13/2012 10AM EST)
If SPX holds around 1377ish and then rallies back to 1387+, we'd have what looks like a wedge/LDT up from 1357. That would increase the odds for continuation higher as part of an LDT wave A to 1390ish, a small wave B to 1367-1377 and then a wave C to 1390-1400+. That would make Tuesday the cycle low that was projected for Thursday +/- and allow the rally/consolidation to stretch near OPEX Friday before dropping to 1340 and probably sub-1320 approaching May 3rd. However, if SPX breaks below the lower wedge/channel line at 1375ish today, that scenario becomes much less likely and we'd have 3 waves up from 1357 with wave overlap back down keeping my bearish expectation for a 5th wave down to sub-1357 and maybe 1340ish by Mon/Tues. Although SPX did not reach 1393 to break my preferred count, it got close so I give my 5th wave scenario only a 60/40 chance over the ABC up continuing for another week. Let's see what happens at 1375/1387. Good luck.
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I mentioned a couple weeks ago how the Dow technicals seemed to be driving things more than SPX. Dow tested/pierced its 20dSMA about 5 times during the 3-month rally while SPX only came close a couple times. Dow double-bottomed off its 50dSMA in December before rallying 12%. Both Dow and SPX have been backtesting their 2011 bull market highs.
If Dow continues to provide better techncial indications, things look bearish unless Dow can continue rallying for the next few days past SPX-equivalent 1400. It should be noted that Dow severely broke its 50dSMA on Tuesday and has since bounced right back to it for a possible backtest. Also, Dow broke its March low (SPX equivalent 1340) and its uptrend line from October 2011 unlike SPX. If SPX and Dow fall a similar percentage, Dow would break its Oct-Dec 2011 wave highs when SPX breaks below 1320ish.
SPX 1340 is important but the equivalent was already broken in Dow. SPX 1293 is also important but Dow would break its equivalent level long before SPX. So, within my target range of 1290-1320 for SPX in May, 1320ish is gaining in significance. SPX could find support at 1300-1320 not breaking its 1293 high from 2011 or coming anywhere close to its 200dSMA, while Dow could pierce its 2011 high and tests its 200dSMA. That would leave a little something for bulls and bears to hang onto...perfect for a big bounce and sentiment confusion. But, if the Dow continues to lead technically, you'd have to lean towards the bearish case and probably a lower high around the spending-projected June 1+/- top.
Apple is behaving weakly but still looks like it may be completing a wedge/LDT from its high, so a sharp rebound (LDT scenario) or sharp drop (1-2-1-2 scenario) seems imminent. In addition to my typical SPX analysis, I will be looking at Apple and Dow for clues, and I'd also expect a dollar bounce for what could be the heart of a wave 3 starting within days. Good luck.
Thanks for the post
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