SPX 2050-2070 Reached. Next?

So far today, wave overlap has been achieved in most major indices, but Russell 2000 and NYSE are exceptions. That is probably near-term bullish for a day or three, and it opens up the possibility of rekindling the bull market, but it also opens up the possibility of a further set of nested 1-2 waves with an even larger wave 3 down yet to come. Given the unfilled SPX 2052 gap, the 20/50/200SMAs at SPX 2059-2069 and max option pain just below 2070 (which is usually tested within 1% for the Wed/Thu/Fri of OPEX), today's rally could largely stick into the Wednesday Fed announcement and possibly even rise near SPX 2070.


If SPX 2070 is reached, that will break one of the lower highs I mentioned yesterday (SPX 2068) and it will exceed a 62% Fib retracement and key moving averages. In addition, if the rally closes above SPX 2040 today, my S2 System will likely issue a buy signal. However, if SPX bangs its head on 2060-2070ish without really breaking through, that could actually turn very bearish very quickly as we'd technically still have several lower highs, several lower lows, a typical retracement, key moving average rejection and the potential Fed catalyst in the rear-view mirror.


I personally lowered my 30% short position to 20% on the gap up to SPX 2040 and am building back to 100% short at SPX 2050-2060, but I am prepared to go flat or even long if my S2 System issues a buy signal at the close (with SPX closing above 2040) and the next time hourly conditions get neutral-to-bullish. Currently, hourly condition have actually swung mildly bearish due to being overbought and could get more bearish if SPX rises further into the 2050-2070 price region.


My long-term analysis calls for an extremely bearish CY2016, but seasonality, the Fed, OPEX and historical 5th year results have been the main reasons I've thought SPX could end the year around 2059 +/- where it started the year. Still, bearish surprises in mid-to-late December are not completely unprecedented and the technical setup is there. Plus, my discretionary spending lag indicator suggested Nov1-Dec1 +/- would be a significant 8%+ top while Tim Woods' cycle work suggests the top is in with a half-cycle low now and full-cycle low in late December to January. So, I am trying to balance the bearish technicals, fundamentals and cycles weighing things down with the seasonality and central banks holding things up. It leads me to believe that the next couple weeks could see multiple violent moves but with price ending up near its congestion area for the last year and then collapsing in Jan/Feb/Mar. I've been calling for the year-end violent moves to include a drop to 1950/1900ish and then a rally back to 2050+. Who knows, but I hope my System and technicals catch the majority of those moves. The Wednesday Fed announcement is the big wildcard in terms of how the market will try to fake us out, so that's the main risk I'll be trying to manage. I recommend preparing what you will do if A, B and/or C price action happens after the Fed decision. Good fortune.