Potential Parabolic Price Projection

Due to recent spikes in bearish sentiment in terms of put/call, TRIN (again today so far), investor surveys and other things measured by Sentimentrader etc, I am feeling more confident that the next lower low projected for next week will allow for a stronger, longer rally than we've seen in a while. We haven't seen anything longer than an 8-9 day rally since April.

I am posting my parabola chart again below but with notes and a projection added. Obviously, the projection is just one potential path following the parabola. I will reevaluate the short-term projection if SPX rallies above 1993 before testing 1867.

What can we expect for the next month if SPX makes a lower low in the next week or so? The most interesting thing to watch will be whether or not the Dow breaks its annual reversal level at 15341, but numerous factors I've discussed including that make 1828ish (+/- 10) a good target. In terms of timing, my spending indicator is projecting a top from late October to late November with numerous reasons including cycles, seasonality and key events supporting a more significant low before then. If SPX 1828 ends an abc W-wave from 2105 as I've counted, then the X wave could travel as high as 2135+, but common targets based on history include (1) the 200SMA, (2) the breakdown price level, (3) max option pain, (4) previous pivots and (5) Fib 38-62% retracements or even 77%. If you count the drop as a 12345 or different ABC, I don't think it changes the next rally target too much and I don't support counts that count the short rally to 1993 as the end of some higher-level wave. Let's review the 5 most common rally targets using 1828ish as our bottom and mid-to-late September as our top target.

1. The 200SMA is currently at 2073 falling a half-point or so per day. In 10-15 trading days, it should reside at 2060+. Although piercing the 200SMA seems more common, I've seen bear market bounces that fall just short and this is just an estimate. Let's use 2060.
2. The breakdown price level is most likely 2040, the bottom of the 7-month consolidation zone. One could argue that gap downs from 2080 or above or the breaking of the 200SMA are the actual breakdown levels, but at least 7 prior trading days during that 7 months pierced the 200SMA including 2 closes below it. Also, gap downs from 2080ish had been survived previously. The difference to me was that 2040 was cracked and not recovered quickly. Let's use 2040.
3. Max option pain currently sits at approximately 2040 for Sep 18th and 30th and 2000 Sep 25th. Since it typically drifts lower as price sustains lower, those numbers will likely drop in our scenario. However, these are numbers for specific dates and overshooting max pain days before or after option expiration is common. Let's use 2000-2060 as a target for this indicator.
4. Previous pivots include various targets at 1972-1993 and 2040-2073.
5. A Fib 38-62% retracement of 2105-->1828 would be 1934-2000. If I use 2135 as the top as many will, the range rises to 1946-2018. A larger Fib retracement has not been uncommon in the initial stage of a bear market as seen in 2000 and 2007. If we calculate a 77% retracement, the target would be 2041-2065 depending on the top used. Due to the previous EW pivot at 1993, bear market history and oversold indicators, let's use a 50-77% retracement which is 1982-2065.

Those common metrics give us a rally target range of SPX 2060, 2040, 2000-2060, 1972-1993 & 2040-2073 and 1982-2065 into mid-to-late September. Obviously, those numbers would need to be tweaked up or down slightly if SPX does not bottom near 1828.

2 things make me believe the rally will only reach the lower half of those targets.
1. Everybody is talking about 2040-2060 and Mr. Market generally makes the majority look like fools. This is somewhat anecdotal but also human nature given the 7-month consolidation breakdown.
2. My parabola research and theory suggests the 2015-2016 bear market will continue to grow in speed and time as the last 4 bull-bear markets have done. While piercings of the projected parabola are allowed as seen in the previous bear markets, the projected line is around 1970 in mid-to-late September. The 2007-2009 bear market parabola applied to year 2015 does produce a line crossing 2040ish in mid-to-late September, so 2040-2060 is possible but would diminish the exponential parabola theory. All in all, sticking to my theory, it looks like a piercing of 1970 is about as good as we can expect.

So, I am projecting a low near 1828 in the next week or so and a subsequent rally to 1970-2000 +/- into mid-to-late September. If things unfold similar to that, I'll make further projections, but one possible path can be found in the chart below keeping in mind December is usually bullish with few large declines. Good fortune.