(Update Tues 7/3/12 9:45AM EST)
System hourly support has risen to 1359. Option #2 below looks more likely at this point. A break below 1359 has good odds of testing the 1340s (maybe even 1340ish). There are large negative divergences on the daily, hourly and 15min charts, and the NYAD/TICK spike combo that occurred late Friday usually leads to more than a 10pt pullback. However, today is half-day holiday trading with a likely ECB rate cut on Thursday, so one more spurt is possible before a 20-30pt pullback. Good luck and enjoy the freedoms that remain.
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All the major indices broke their June highs. The June SPX 1267-->1363 rally looked like an ABC followed by 3 waves down to 1309 and now 3 waves up to 1366. I have been projecting an ABCXABC (WXY) from 1267 to July 4th +/- a few days for time, cycle and other reasons. Today, that pattern is potentially finished, but there are actually 2 bearish options.
1. A WXY rally from 1267 has (nearly) completed at 1366
2. SPX has only completed WX and part of Y (either AofY or 3ofAofY) suggesting 1380-1400+ is possible within the next 1-2 weeks
If SPX makes a new high above 1366, option #2 seems likely to lead to a choppy market for a few days with upside bias supported above 1340ish followed by a final 1-5 day spurt to 1380-1400+. SPX 1334 is a line in the sand with 50dSMA and 89hEMA/SMA support at 1340ish, so option #1 is likeliest below that. My System is bullish right now but the hourly trend will turn down temporarily if 1354 is reached and probably test the 50dSMA.We may be in no-man's land (~1340-1370) for 2-3 days until we get through the holiday and hear the ECB rate decision (expected to be a .25% drop) on Thursday and the June jobs report on Friday. Good luck.
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