Tues 4/3/12. Here we go.

(Update Wed 4/4/12 9AM EST)
 Futures are suggesting an open at 1400-1405. One can interpret the waves down from 1422 as a series of 1-2-1-2s or a less likely expanding descending triangle. The latter would bounce shortly after the open back to 1410-1420 over 1-3 days. If the rally ended at 1422 on disappointment that the Fed may not give the junkie any more highs for a while, then I'd be surprised by a retrace rally back near 1422. But, 1391 must be broken to be sure. Getting below 1401 might accomplish that because we have 3 recent pivots at 1401-1405 forming support and a potential H&S projection to 1387ish. Here we go.
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I like the Bud commercials with the dog named "we go". That phrase can also signify the start of something big in the stock market...which might ultimately lead to drinking Bud in celebration or misery. Anyway, I think the stock market is at one of those moments. We have a 5th wave EDT setup from SPX 1340. Maybe it's too obvious, but we're certainly extended and in the recently dubious month of April. Breaking 1391 would confirm the EDT since that would break the last wave low and the 20dSMA. The other option is that we could be finishing a sideways wave 4 or even a wave 2 of 5 from 1340 either of which suggests one more surge to the 1440s or even 1500ish. So, here we go.

The hourly trend is down, the daily trend is up and all the key moving averages are aligned upward with price above them, so a caution flag has been raised with the benefit of the doubt going to the bulls until the moving averages and/or daily support break at 1387-1391. Using my new way of judging 40-day cycles which can overlap, I anticipated a low in the middle of last week. The next projected cycle lows are for late next week, then May 3ish, then May 18ish. One cannot predict whether the lows will be very significant or not, but we are due a big one. I tend to think 1371 (the 2011 bull market high) will survive its first serious retest with a piercing, and the uptrend line from SPX 1075 and the 50dSMA just so happen to be rising to 1355-1365 over the next couple weeks. So, if SPX begins a large pullback now (likely to be confirmed by a strong dollar rally due to growing perception of no QE3 soon), I expect to see it pierce 1387-1391 and then probably 1355-1365 over the next 6-8 trading days followed by a short-lived rally back near 1400. If that scenario plays out, we should get a much deeper low in May (maybe 1300-1320 or even 1250-1270) because trend lines, moving averages, momentum and wave counts would have been broken and then maybe we'd get a dead-cat lower high again into June 1ish which is one interpretation of the discretionary spending data and the approximate end of Operation Twist. A lot depends on whether SPX rallies above 1425 or below 1391 first. Here we go.