Current SPX Position: Long at 1690.95
Next Action: Stop and go short at 1704.38
System Score: 5=Neutral=Trend Score + Turn Score=10-5
Proposed New Score: 58%=Neutral/Bullish=Trend Score + Turn Score=48+10
The Score has turned neutral, so the System will go short at 1704. The Proposed New Score is at 58%, but I have not yet studied whether 44-56% or 42-58% is better as the neutral range. Arguably, the scores are back in sync.
I suggested SPX may be completing an EDT or LDT on Wednesday and the sharp initial drop favored the EDT. However, no key support levels were broken and SPX rallied even sharper. It is possible to count the SPX action from 1676 as 5 waves with a wave 1 LDT. And, it seems possible to count the corresponding Dow rally as an odd-looking EDT. And, my gut feel for the blogosphere and business news is that more people are bullish than have been bullish in a long long time. In fact, I heard "goldilocks" used to describe the Fed/economy situation about as much as I did in mid-2007 and I haven't heard that term much in between. Although a 100pt Dow drop or 10pt SPX drop would clear some key near-term levels, I think there are legitimate bullish counts until SPX drops below 1685. And, choppy upward triangular action often turns out to be nested 1-2 waves.
Given the Score and the potential wave setups, it looks like 4hr support at 1704 is a good dividing line between a sharp wave 3of5 rally or a retracement of 1560. However, 1700 and 1685 are key short-term levels that are needed to gain bearish momentum and Tony Caldaro points out that the pattern of recent bull market rallies has been 9-13pt corrections which would equate to 1697-1701 currently. Of course, 4hr support and Tony's 9-13pt range could rise if SPX rallies a little Monday morning, but for now the numbers seem to indicate 1700 +/- a few points is a key level and 1682-1685 would seal the deal. But, if SPX takes off to 1620+ Monday, the bearish setup will be mitigated...again. Good fortune.
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