Current SPX Position: None
Next Action: Long at 1679.52
System Score: 8=Bullish=Trend Score + Turn Score=6+2
Proposed New Score: 56%=Neutral=Trend Score + Turn Score=24+32
The proposed new score went neutral and the System would have gone short at 1635.52 with stop at 1654.67. Although the current and proposed score have differed neutral vs bullish or bearish 4 or 5 times since I started it late last year, this is the 3rd time that an actual trade would have differed between the scores. Let's see how it shakes out and I'll evaluate things once we have confirmation that a 5%+ downtrend has concluded.
SPX volume was heavy during Friday's last hour. The last 3 times it was higher in the last 3 months led to a 1% +/- rebound for a day and the last one led to the 1536-->1687 1-month rally. However, the previous 2 cases and several days with nearly as much volume led to 1-2% further downside over the subsequent couple weeks. And, the daily volume was a little higher than average but nothing extreme with 4 higher volume days in the last 6 weeks. So, a 1-day rebound starting sometime Monday seems likely but it's not likely to be the bottom. The initial 1600ish target remains for all the previous reasons given and now the 50dSMA resides there too.
Although I typically allow for 1-2 days of flexibility, the ideal time window projected by my discretionary spending analyses has essentially closed since we are too far below 1687 to expect a new high Mon/Tues. That means 1687 on May 22nd was a likely top with an 8-10%+ drop expected over 4-9 weeks. That calculates to 1518-1552 by June 19th to July 24th. With a ton of price-volume support at 1550-1600 as well as a number of pivots just below that, I suggested the market would clear its weak holders by spiking below 1550 to probably 1530-1550 which has recently been targeted by Tony Caldaro for his OEW reasons. In terms of date, it just so happens that June 18-19 is the next FOMC meeting with OPEX on June 21 as well as marking a typical 4-week downtrend, so June 18-21 offers a good opportunity for a trend change. July 4th +/- also offers a good week of confluence for a bottom or top since there is the July 4th holiday, the July 5th jobs report and the July 1st start of new quarter.
Thus, assuming the downtrend is confirmed next week, it is not difficult to envision 1 of 4 scenarios...
1. The downtrend ends June 18-21 at 1530-1550 (1600ish seems too shallow for 3 more weeks)
2. The current downtrend ends during the week of June 10-14 at 1550-1600 with a bounce into June 18-21 and a further drop to 1500-1550 in the 1st week of July
3. The downtrend wave A or 1 ends around June 18-21 with a bounce into the first week of July followed by further damage into mid-to-late July.
4. The downtrend ends in the 1st week of July at 1500-1550
Of course, all of those scenarios could be wrong but we're just projecting the odds and the likeliest ways to get there. Max OPEX pain for mid-June appears to be around 1580 currently, so a bounce into that date might require a 1-2 week swoosh to 1550ish beforehand whether most of that swoosh occurs before or after the Friday June 7th jobs report, whereas a drop to the 1580s around OPEX would allow for a decent bounce/consolidation this week first. The scenarios will narrow after the jobs report. Good fortune.
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