Wed 7/25/12. Daily Updates.

Date-Time	Wed 7/25/12 3:45PM EST
Active SPX Trade	Short from 1369
System Score (S2)	8 = Trend Score + Turn Score = 5 + 3 = bullish upon T2
Trade Trigger (T2)	Stop out and go long at 1344.71 with projected bullish score of 7+ at that level. T2 will drop to 1339.63 if SPX closes an hour below 1331.86 first.
Commentary	SPX could not hold the morning rally and then made a lower high below T2, and, looking at Dow, it appears to have completed a weak ABC bounce from 1329. However, if SPX does reach 1344.71 at this point, I think the odds will favor a successful long trade to 1355-1365+ as the System suggests. For now, we stay short. The afternoon rally does not fit the potential irregular flat scenario that I laid out below, but it still sets up a possible 1-2-1-2 scenario so a wave 3 down could start at any time between now and the FOMC meeting. I kinda think unemployment claims (which dropped hard and then rose hard possibly due to holiday factors) will stabilize Thursday which might be better than expected, but sentiment and GDP into Friday are likely to disappoint. I'm not sure how that will play out in stocks especially with more earnings and Fed rumors mixed in, but stay tuned. If SPX moves lower into Fri/Mon, the Turn Score will probably be at its maximum 5 but the Trend Score would likely only be at 1-3 so S2 would not even be as bullish as it is now and thus any decent bounce would likely fail within a few days. Bulls probably need a gap to/over 1344 on Thursday to stall things into the Fed. Good luck.

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Date-Time	Wed 7/25/12 10:40AM EST
Active SPX Trade	Short from 1369
System Score (S2)	8 = Trend Score + Turn Score = 5 + 3 = bullish upon T2
Trade Trigger (T2)	Stop out and go long at 1344.71 with projected bullish score of 7+ at that level. T2 will drop to 1339.63 if SPX closes an hour below 1331.86 first.
Commentary	Not much has changed. SPX rose near T2 after the open and S2 rose 1pt, but the System is still short for now. We probably have years longer to deal with the unfortunate reality that market success is reliant on central bank easing and related rumors. Although the System does not rely on EW or patterns, many other traders and algos do use them, so they can help us with 25% profit-taking and mental prep. IMHO, SPX may have completed 5 waves for 1380-->1329 but my custom DRSI tool disagrees and the last leg down (1336-->1329) looks like 3 waves to end a double ZZ (1353-->1329). So, I think we possibly witnessed the completion of a larger 3-3-5 irregular flat (1338-->1353-->1329-->1344) at the morning high. If so, those do not typically occur in wave 4s, so it is likely a wave 2/B in which case SPX is likely to match or exceed 43pts (1380-->1338) for its next downleg. Thus, the projection is 1344-43=1301 or lower with a fakeout 10-15pt rally from the 1320s. Of course, that setup is eliminated if SPX rallies to 1345+. If SPX does drop further and then bounce from 1290-1310, it will set itself up to be counted as a 1-2-1 or A-B-C into the FOMC announcement. That would keep us on the edge of our seats. My guess is that the Fed does something small at each meeting until the elections but saves more drastic measures for later but I'll bet actual money on my System, not that. The failure of USD to breakout again is concerning for the SPX bear case, but it sure seems like everything is setting up for a decisive break based on the Fed announcement next Wednesday August 1st. Good luck.

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Date-Time	Tue 7/24/12 5:25PM EST
Active SPX Trade	Short from 1369
System Score (S2)	7 = Trend Score + Turn Score = 4 + 3 = bullish upon T2
Trade Trigger (T2)	Stop out and go long at 1344.71 with projected bullish score of 7+ at that level. Take 25% profit on any large gap down. T2 will drop to 1339.63 if SPX closes an hour below 1331.86 first.
Commentary	Apple is a huge chunk of many indices and disappointed after the bell. Unless we get unlikely overnight intervention, it appears SPX will retest today's lows. There is posd at the 15min and 60min levels, a possible LDT and H&S in the works, a previous pivot at 1325 and a rising Turn Score, so I anticipate a large SPX bounce starting Wed/Thu. But, we ride trends and don't front-run reversal trades until we get hourly candle confirmation with a reversal score. A close below 1331.86 at 10AM tomorrow or later would obviously increase the trade profit and tighten the stop. If we do get a bounce, anything that cannot recapture 1352 for long is prone to failure based on projected scoring, and the bigger picture is looking U.G.L.Y. unless the Fed decides to give our economy a temporary heroin shot. So, be careful. Good luck.