Current Position: Short from 1423.53
Next Action: Stop and go long at 1392.02 (will drop to 1388.93 if SPX closes lower at 10AM)
Score (0-10): 5=Neutral=Trend Score + Turn Score=1+4
SPX is now setup for an imminent big rally. Of course, I cannot say how far SPX will fall before then which is why you ride the trend until it ends and wait for a predetermined reversal trigger to get long. In the System, the Score tells us whether reversal conditions are in place, and 4-hour s/r provides the trigger. Currently, the Score is neutral which is enough to reverse long on a 4-hour resistance break, but I can say with near 100% certainty that the Score will be a bullish 6+ if SPX rallies near 4-hour resistance at 1392, so a reversal long trade is definitely called for in that case.
SPX currently resides between our 200dSMA and 1370ish targets. Lower is possible but be prepared for a sharp snapback. Today was another Buy-on-Weakness day, TRIN has been high for 2 days, there is slight daily RSI5 posd and NYAD made a small change near a bearish extreme. All of those things individually typically lead to a rally within a day or so if not immediately.
My personal opinion is that SPX probably completed an ABC from March 2009 at 1475 with the C-wave being an EDT from 1011. There could be an EDT to end the EDT in which case SPX would rally once or twice more to 1475+, but I doubt it. So, I think 1420-1440 is a tough resistance zone that SPX could retest, but a failure at 1400ish is not out of the question. What should happen with the System is this...the Trend Score is bearish now and will likely stay that way unless SPX can sustain 1420-1430+ for a few days and the Turn Score is bullish now but will turn south once SPX relieves oversold conditions for 1-3 days which means SPX is likely to have an extremely bearish score once it rallies for more than a few hours and then breaks below 4-hour support. That means whatever low is established now is likely to be retested and I think it will be heavily broken. In fact, if my EDT pattern is correct, SPX should drop back near 1011 within months. March is very often a turn month, so I'd guess 1000-1100 in March 2013, but of course my prognostications mean nothing to the System although it would catch the bulk of such a fast, large trend. Good luck.
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