(Update Thu 4/19/2012 3PM EST)
Well, my original 1370ish target for today was met but I was shaken off the ride at 1385 for a small profit after SPX pierced 1390. Dangit! Anyway, I do believe there is some support at 1370ish, 1356ish, 1340ish etc. My technicals do not suggest SPX is too oversold to go much lower and they are still bearish for the next couple weeks. If SPX bounces from 1370, there are 3 things supporting a rally to 1380ish+: (1) the 50dSMA at 1379, (2) a 50-62% retracement of 1390.46 at 1380-1381 and (3) OPEX max pain near the 1383-1393 range and the historical bullish bias of April OPEX. There is also an OEW pivot at 1372 and 1386. None of those are a guarantee of anything and neither is consolidation into the Wednesday FOMC meeting. Just the facts, m'am. I wouldn't rule out an overlap of 1383 as part of an LDT wedge down in time for a Fed headfake, and I wouldn't rule out a more complex zigzag back up to 1393+, but the count is less important than the overall technical evidence supporting more downside for 2 weeks. So far, this week's historical odds have played out with an overall bullish bias having strength on tax day and weakness for 1-2 days after. Now, let's see if we see a bullish April OPEX Friday as the odds favor. I've been getting a little too caught up in the intraday wiggles the last few days which has mostly worked because I've been mostly in sync with the market, but I've also learned that's a quick way to get out of sync and miss the forest for the trees, so I've got to temper myself a little bit. I'm done for today and swamped with work tomorrow. Good luck.
(Update Thu 4/19/2012 10:30AM EST)
From the Tuesday 1393 high, it appears that we have an ABC down into the Wednesday open followed by a complex sideways ABC all day Thursday followed by an ABC down until about 10:15 this morning. This increases the odds that SPX is heading higher to 1393-1402. The theme is still for SPX to end up near the max option pain range of 1383-1393 by tomorrow morning and hold up reasonably well into the FOMC announcement next Wednesday. I've taken small profits on the last couple drops but I will completely exit temporarily on the next pullback after 1390 four-hour candle resistance is breached and wait for another short opportunity (or potentially a long opportunity if 1402 is exceeded). Good luck.
P.S. Out of my shorts at 1385 but may reload if 1379 is breached or SPX reaches 1393+.
P.P.S. 12:30PM. Wild 1% range day so far. I don't recommend this, but I'm trying a half-size long position at 1380 only because I can place a tight stop at 1378/1379 and expect a rally to 1393+ and have 4 hours to exit if I don't like the close into overnight. I'll likely flip back to short if 1379 is breached but maybe after a bounce since I think 1383-1393 is the target for Friday morning.
P.P.P.S. Out again. Got too cute but no harm done. I'm not sure of the count or pattern (wedge to 1393+ still possible but a triangle, LDT, multi-zz and endless other possibilities exist so no edge there) and I still expect a small bounce into OPEX so I will just step aside until at least tomorrow. I probably won't go long again until sometime after SPX reaches the 1320s, approaches May 3ish or exceeds 1402. Peace.
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The bottom line is that "sell the rips" is still in command due to the technical setup, but OPEX max pain, the upcoming FOMC meeting, the anticipated Spanish auctions and trained dip buyers are holding the market up. I think the setup favors a trip to SPX 1370ish followed by a bounce near 1380-1385 for OPEX followed by another stair step lower into the FOMC announcement followed by a fast and hard drop into the last week of April or first week of May. After that, we can judge whether SPX has held 1320ish (equivalent to Dow's 2011 highs) and whether or not it has formed an ABC or 123. In either case, I expect a sizable May rally whether it begins May 3ish or May 18ish but the 123 pattern would obviously lead to a miserable June/July. Let's see what happens. I'm short again with a cost basis of 1391, stop at 1402 and initial targets of 1371ish and 1356ish. There is heightened weekend risk with OPEX finishing, Spain in trouble and few people expecting a large downside surprise especially if the Spanish auction does not go well, although odds still favor nothing happening prior to the FOMC meeting. Good luck.
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