Quick Update

Tiny SPY SOS day. This does not preclude further rally but should minimize it. TRIN 1.8 despite small rally. This does not preclude a big drop but usually leads to 1 or 2 rally/consolidation days. Taking these 2 indicators alone, SPX could stagnate or grind slightly higher for 1-2 more days.

With Friday monthly OPEX arriving after 3 more trading days, that small trading range could even extend through this week. I projected max option pain to drop from SPX 1980ish to SPX 1950-1970 for this OPEX as part of my sideways triangle count, but the longer rally has actually pushed max pain up to 1990. Perhaps, SPX 1980-2000 is now the target for end of week.

I still fall back on my big picture analysis. My S2EW analysis along with the 40-year cycle and typical business/presidential cycle favor a major low in 2016-2017 with Q2 2016 +/- being a major time target. Many successful systems and experts including Tim Woods, Peter Eliades, Terry Laundry and Robert Rhea have concluded the drop to that low has officially begun. My Magical 48% analysis, my exponential parabola analysis, the history of ATH breakouts and Fib patterns across 5 bull-bear markets favor that major low to reach SPX 1700ish in fairly short order and ultimately the 1100s at a minimum.

However, my consumer discretionary spending indicator suggests a significant high around late-October to late-November. And, my annual reversal study back to year 1896 and my Fib pattern analysis also suggest Dow 15341 and SPX 1822-1851 need to be broken before the BIG drop becomes 90% likely.

I have been projecting a drop to 1700ish to occur in late October followed by a strong rally into November and then consolidation into year-end, but that time-and-price scenario is one of many that fits my big picture, albeit the one I thought most likely. As the current rally progresses, that scenario seems less likely. Perhaps the high will actually occur next week or the following week in the last half of October near SPX 2040-2060, then fall to 1700ish, then consolidate into year-end before collapsing in 2016. But, it's also not hard to spot 2 drops of 250pts within 1-3 weeks on a 1-year chart so my original scenario still has a shot no matter the pattern. If SPX weakly pops and drops 1-2% this week as I suggested likely in the first 2 paragraphs, that still leaves all options on the table, so unfortunately I don't think we'll get any good answers for another week or so. And, that means I will likely not have much new to post either. Until next time, good fortune.