BOW WOW THUD

Today was a big BOW day, not as big as the SOS and BOW days last week, but still very big. 2 large BOW days in proximity bodes well for the very short-term but that adds to the price-volume in the 1920-1930 range which can cut both ways.

Speaking of SPX price-volume, the 1-year view shows mild s/r at 1920-1930, strong s/r at 1960 and very strong s/r in a large range at 1830-1890. Looking at the 5-year bull market view, strong s/r resides at 1850ish, 1650ish and 1150-1450. Looking back 1 decade, strongest s/r resides at 1300-1400 with next strongest at 1850. I was a little surprised at the latter stat and the 5-year and 10-year view combined show a surprising amount of price-volume around 1850 even though that wasn't even a level attained until this year.

The 200dSMA resides around 1860 rising about 1pt per day. It is very common to get a good-sized bounce from the initial test of the 200dSMA +/- 2%. The Dec/Jan tops were at 1850ish. The numerous Mar/Apr/May bottoms were at 1820-1860.

Price-volume tells me investors will probably sell the next time SPX reaches 1960ish and make their next big decision at 1920-1930. If that fails again, there will probably be some technical buying/selling at 1900 but not as much as the 1920s, so SPX will probably fall pretty quickly to next support at 1850ish where the Russell 2000 would probably form a triple bottom at 1080ish.

There should be a big oversold bounce from there but some people don't believe in triple bottoms and there will be a lot of technical damage, so downtrending moving averages and previous support at the 1920s may become resistance areas setting us up for a retest of the bottom where SPX will decide to begin a bear market or rally into Christmas.

I give 60/40 odds to further downside Wed/Thu to 1901-1914 simply because 1920-1930 should briefly serve as resistance and the EW pattern looks like it could use one more wave and my hourly technical are not all looking overly bearish yet (especially TRIN). However, the 2 large BOW days and the fact the downtrend has reached a typical 6 +/- trading days using the failed 1985 high as the top and enough oversold indicators favor an imminent bounce larger than the one we just had 1916-->1942.

So, here is my favored scenario.
1. Probable drop to 1901-1914. Wed Aug 6 +/-
2. Rally back to strong 1-year price-volume resistance at 1960ish where the 20dSMA and 50dSMA will also likely reside. Plus, max SPY option pain for Aug 16 is currently 1955-1960 and likely to stay near there.  Thu/Fri Aug 15-16 +/-
3. Drop back to the 1920s for a short-lived bounce, an even shorter-lived bounce at 1900ish and then a cascade lower to 1860 with a small wave 4-like bounce at the 200dSMA and lots of posd as bottoms are formed around 1850ish. Thu/Fri Aug 28-29 +/-
4. Early September Labor Day rally maybe back to OPEX max pain probably at 1920-1930 in mid-to-late September.
5. ???? Maybe 40% chance for a retest of the highs. Maybe 60% chance for a new bear market with a Russell 2000 triple bottom breakdown with next SPX price-volume support at 1650ish which is approximately a Fib 78.6% retracement similar to previous retracements of bull market highs previously surpassed by 10%+ for a year and aligning with the final tapering of QE3 into historically weak October???

My alternative scenario would be a slight new all-time high into Labor Day or slightly beyond followed by a new bear market with a nasty 2-3 months followed by a Dec/Jan rally. It all depends on what happens if 1960ish gets retested. Good fortune.