Mon 5/7/2012. 1340ish target?

(Update Mon 5/7/12 2:55 PM EST)
Critical moment for clarity. Until SPX breaks 1357.38, there are countless possible patterns including sideways and diagonal triangles, so, for selfish technical reasons regardless of ultimate outcome, I'd like to see SPX briefly break 1357 down to the 1340s. Today's consolidation seems like the wave 4 of C I was looking for in which case I might get my wish, but I'm wary of a triangle. Good luck.
___________________________
If we assume Friday's large SPX drop was part of a "flat" pattern (1422-->1357=A,1357-->1415=B, 1415-->1340ish?=C), then it is likely that this morning's drop will complete wave 3 of C with price symmetry at 1358 +/- near the previous 2 lows. A shallow 20-30% wave 4 retracement of wave 3 would allow an 8-13pt bounce, so today's gap open may be filled or nearly filled followed by a wave 5 down with w5=w1 in the 1340s and lots of support (described in a recent post) at 1340ish. VIX would also likely test its upper BB20 in this scenario with TRIN > 2 at least intraday.

I think the same scenario works whether or not SPX pierces 1357 today. If SPX does manage to hold 1340ish or higher, it is very plausible for SPX to make 1 more run at 1422 to 1410-1450 in May before really rolling over in June/July. Amazingly, discretionary spending is at multi-year highs right now and the remaining bears may jump off the bandwagon if the "sell in May" mantra appears to fail this year with a new high in late May or early June. And, 1-2 more months in a 7-8% range really sets the market up for a HUGE move once that price-volume becomes support/resistance. I think the direction will be down to retest the 2011 lows, but a surge to all-time highs at 1576+ is not out of the question.

Here are some of the reasons I favor a HUGE down move in June/July....
1. Terry Laundry's bearish T with expected downside acceleration into late June or July
2. a potentially huge discretionary spending projected top for the week of June 4th +/-
3. the high odds that a presidential election year should end near flat (1257)
4. the rolling over of index after index in the last few months and
5. the gaming of the political time bomb waiting to explode with debt ceiling breaches and new 2013 taxes

Good luck.