(Update Tue 7/10/12 10AM EST)
Key time. SPX has retraced 50-62% Fib of 1375-->1347 at 1361-1364. If SPX gets much higher, there will almost certainly be a retest of 1375. On the other hand, if SPX now falls into July 13/16 as I suspect, wave 3/C is likely to exceed the 28pts of wave 1/A, so SPX is likely to test 1330 and very possibly the OEW 1313 pivot range at 1306-1320. If my SPX target of 1290-1310 is reached by early next week, then SPX is likely to bounce into July 20th OPEX max pain near 1340 (could drop to 1330ish by then) followed by sub-1267 on the cycle low projection of July 30 +/-. The bounce from there will determine whether a new bear market has started. The 5th wave of a C-wave wedge to 1422+ to complete an ABC from 667 is still a possibility but would likely require QE3 at the August 1st FOMC meeting. Good luck.
(Update Fri 7/6/12 1:45PM EST)
SPX has already fallen into the major 1340s support zone. Tony Caldaro specified 1342/1347 as support. Terry laundry's mid-channel support resides at 1341. The 89hEMA/SMA and 10dSMA are near 1345 with the 50dSMA and 20dSMA near 1340. If 1375 was the top of the bear market rally as became likelier based on Thursday's action as described below, I'd expect a short-lived bounce from the 1340s followed by another 3-5 days down into July 13/16 probably testing the 1290-1310 zone at a minimum. Good luck.
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System hourly support was narrowly broken at 1363.53. However, given the bullish configuration of price and moving averages with the next projected cycle low of July 13 +/- still 8 days away, it's not a high-odds short setup. Still, based on my recent analyses, you can probably guess that I do think it is an ideal time to build a multi-week short position for a large dip into late July or August.
What in particular makes me think today/tomorrow is shaping up to be a possible top lasting multiple weeks?
(1) Dow/SPX have formed corrective patterns from early June. Dow has now formed what looks to be a 5th wave up from June 25th, and I think one can easily count a 5-3-5 pattern from June 4th. 5-3-5=ABC=corrective. SPX has now formed what looks to be a 7-wave pattern from June 25th (although 3 waves could also be interpreted) thus finishing an ABC/WXY/correction.
(2) US Dollar exceeded its late June high today and is threatening its 2-year high. You know that I have the fairly unpopular opinion that USD is very possibly setting up for a wave 3 up after a 1+ year nested 1-2 wave pattern.
(3) Breadth indicators (NYAD, TICK etc) just reached daily and weekly extremes that are typically reserved for tops within days but sometimes mark bullish kickoffs.
(4) My spending indicator projected the week of July 9th +/- one week to be a very significant top. The last top projection for April 9th came 1 week early on April 2nd.
Folks, unless the Fed does more than a watered-down version of Operation Twist or the ECB starts LTRO3/ESM, there seems little reason to be fundamentally bullish. And, given central bank actions in the last couple weeks, none of that is likely until at least August 1st at the next FOMC announcement if not longer. Sentiment is fairly neutral in most regards. Technicals are bullish but ideal correction price and time criteria have been fulfilled. The best bulls can probably hope for is SPX triangulation/consolidation until the central banks act more strongly, but I'd be a cautious bear until the technical tide turns. Good luck.
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