Fri 6/29/12. Final rally?

(Update Fri 6/29/12 7PM EST)
I was gone all afternoon and missed the last squeeze. The Russell 2000 made a higher June high today while SPX, Dow and Nasdaq all narrowly missed doing so. I don't have a clue how Monday will open, but if SPX gaps up, I will be shorting for a 10+pt pullback with stop at the high, because NYAD hovered at extreme highs all day while TICK finally spiked in the last hour and that combination usually leads to a 1%+ pullback if not a short-term top. I suspect next we'll see a wave 4ofAofY pullback followed by wave 5 and then 1-2ofCofY which means things would be choppy with an upward bias next week probably concluding in a 3-4-5ofCofY to wrap up the rally. If SPX does gap/run up to 1370+ on Monday, I think any pullback will find support at 1360ish or worst case 1340ish where the 50dSMA and 89hEMA/SMA will be. In my ideal technical world, I'd love to see SPX make a shallow 10-15pt pullback on Monday to 1350-1360 (possibly after a gap up) followed by a new high with negd to maybe 1370-1380 followed by a larger wave BofY pullback retracing 38-50% of the rally to 1340-1350 followed by CofY to 1380-1400+ all ending next week or early the week of July 9th. That's how I'm going to play it if my System technicals cooperate. Good luck and good weekend.
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Well, SPX opened OPEX June 29th in the max pain zone of 1330-1350 (max pain dropped a little in the last week) and is now testing 1350. Sometimes reaching the target a day or two before OPEX suffices but this was a bullseye again. After yesterday's disappointing healthcare news, I was more doubtful that Europe could pull off another stick save for a rally to 1363+, but it certainly looks possible now. No matter how this shakes out pattern-wise, SPX has entered the early edge of a time window for a large top. Ideally in terms of my technicals, SPX would rally to 1363+ within the first week of July forming an hourly divergence, sub-17 VIX and hourly TICK spike to join NYAD followed by a 4-candle support break and then cycle lows around July 13, July 30 and OPEX August 17. Putting on my prognostication hat, I would expect the next large wave 1 down (maybe 75-100pts to 1267-1309) to complete around July 13, bounce near max OPEX pain (low 1330s currently) on July 20, cascade in a wave 3 down into July 27-August 3 and then make a 5th wave low by or before August 17 OPEX. The bounce in August would largely depend on Central Bank actions because economies are likely to stay recessionary for the remainder of 2012. If the action is weak in the eyes of the market, a new bear market and subsequent test of the 1011/1074 lows is likely.

However, caution is advised because my System technicals are temporarily in near-perfect bullish configuration with the down-sloping 50dSMA being a mild holdout. Also, Tony Caldaro whom I respect is still calling for a bullish outcome into 2013 although he is a little more mixed about the short-term possibilities. If 1267-->1363 was wave W (abc) as I counted it, then 1363-->1309 was wave X (abc) and 1309-->???? is wave Y (abc). SPX could be completing c of Y or maybe only 3 of a of Y. The latter would better fit a 1363+ top into next week. The alternative is that today is completing a nested wave 2 which will fall short of 1363, but I lean the other way for reasons posted. SPX is likely to pullback if it reaches 1360-1366 again, but, if it breaks through as I suspect, then 1380-1400 is very likely and a new high at 1422+ to complete an ABC from 667 with a 1+ year EDT is not completely out of the question. Be patient and I think an optimal short setup will appear. For now, the bears will probably scramble for a few days because they have been saved after every rally for the last 3 months and Mr. Market needs to shake them out before heading lower. Good luck.

P.S. The other reason to be cautious on the bearish side is the US Dollar. It has had an extremely clear 3-month cycle low pattern since at least 2008 with only 1 difficult interpretation around June/July 2009. The last USD low occurred around May 1st, so the next one should be August 1st +/- 2 weeks. A continued USD drop would support SPX into mid-July which might make the July 13 cycle low a lesser degree low than I'm guessing based on other technicals. On the other hand, that USD low could occur at higher levels near July 20 or August 10 which would be in between my projected SPX cycle lows and USD could be completing its own WXY to 80-81 before the next pop. It;s just something to watch closely. My cycle work calls for a significant top the week of July 9 +/- 1 week, so we cannot throw out the possibility that SPX could rally well into mid-July. We must be patient until the System technicals re-align for a bearish trade (and USD forms another swing low) knowing that could occur at any time in the next 2-3 days or weeks.