Current SPX Position: Long at 1624
Next Action: Stop out and go short at 1643.92
System Score: 5=Neutral=Trend Score + Turn Score=10-5
Proposed New Score: 52%=Neutral=Trend Score + Turn Score=48+4
The Score is neutral. The System is long but prepared to go short at 4hr support (currently 1643.92 possibly rising to 1650.62 if SPX rallies to 10AM tomorrow). I think most would agree the System has proven quite resilient in both large downtrends and uptrends over the last year.
Based on the technical breakout and large retracement of a 5%+ downtrend (and 8-10% discretionary spending-induced drop as projected from late May), my own criteria have been met to conduct an evaluation of the Proposed New Score which I started in late 2012. My initial recollection is that there were 3 extra trades that would have been executed in the last 6-9 months by the New Score but not the current scoring system along with a few other times that the bull/neutral/bear status differed but did not lead to an actual executed trade prior to the statuses realigning. And, my initial recollection is that the System would have had 1 win and 2 losses with an approximate 0.5% total profit in those 3 trades. However, I need at least a month or two to re-evaluate the scores to ensure I accurately recorded them, determine if 44-56 or 41-59 should be the neutral range and then briefly analyze the results. If my recollection is close to the actual tabulated results, I will likely decide to use the New Score going forward, because it is 100-based, uses a slightly more robust 10 varied indicators and is slightly more sensitive to turns after large rallies with only minor tweaks to the original proven System.
Friday and Monday last week with SPX in the 1620s were SOS days and today was an SOS day thru mid-day, so history suggests SPX will not travel more than 2% or so beyond the 1620s before falling back to the 1620s or consolidating for 2-4 days. That means the 1650s and possibly the 1660s should contain the rally before a sizable pullback or lengthy consolidation. Although the rally has extended further than the 1618ish breakout area that was my original maximum for the likelier bearish scenario, it has thus far only formed 3 obvious waves up while the 1687-->1560 downtrend can easily be interpreted as 3 waves down. So, the possibilities remain for an ABC-ABC-ABC double zigzag down from 1687 to sub-1560, a 3-3-5 flat down to 1560ish or lower, a wave 4 triangle with subsequent wave 5 up, a wave B triangle with subsequent wave C down, a huge LDT-looking wave 1 down like late 2007 and a wave 1of? up from 1560 with wave 2 down coming soon. Although the first 5 of those 6 options are bearish to well below 1600 and the latter one is perhaps bearish to 1600ish, I think you'd agree that's too many options to get much edge short-term and premature to evaluate until SPX breaks 4hr support and then breaks below the 1627/1620 highs. So, let's just revisit those possibilities once SPX reaches the 1620s and see where things stand. The mix of summer doldrums with mixed economic and world news could very possibly keep SPX in the mid-1500s to mid-1600s for another couple months (4+ already). Good fortune.
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