Update Jan 20, 2016 3:40PM EST:
Wow! Crazy day. Now, a daily trend reversal seems possible as early as tomorrow. However, one of my swing candle rules is that it's body be in the direction of the new trend. So, if SPX were to gap up Thursday but close below that gap like occurred a week ago at SPX 1938, then the System would not yet consider the trend reversed. more rule details to come. The hourly score is actually still slightly bullish around +30% but the hourlies are no longer extremely oversold. This would normally be a re-entry point short for the System, but things are so oversold on larger timeframes and even the hourlies need more than a couple hours to stabilize, so I think it's better to wait and see if the trend officially reverses or not. Crude oil hitting my $26 target and SPX piercing the October 2014 low and such a huge intraday reversal are 3 reasons to believe this could carry much further, but we need more proof and TRIN and VIX never really spiked like I mentioned. For now, there is the gap at 1882 and a couple reasons for technical resistance around SPX 1900. Good fortune.
Update Jan 20, 2016 12:15PM EST:
SPX is now at the CY2014 1820 low. The drop has been rather relentless. I would now ratchet down any temporary bounce target range to 1870-1910, but an immediate flush to my SPX 1750ish target is also not out of the question. Crude oil has reached my measured target of ~$26 and that has been a drag on SPX, so perhaps there is hope for a bounce here near SPX 1820 but it just feels like there is unfinished business with a need for a bigger VIX and TRIN spike before this concludes even if a bounce occurs beforehand. In fact, even if the market reverses upward today, SPX would have to exceed 1882+ in the next few days with an obvious black/bullish candle and not pop 'n drop or fail to fill the gap something similar as it approached 1880-1900. The technical situation has suffered serious damage. BTW, as of 12:30PM EST, the hourly score is +90% usually indicating SPX is within a few minutes or a few hours of a bottom that should last until hourly indicators reset for 5-10+ hours with price typically bouncing.
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The System still shows all time levels in a downtrend. Although the System is agnostic to projections, my personal analytical projection for a bounce just before Christmas worked but my projection for a sizable bounce from various spots in the 1900s in the last week or so has failed. How low will it go? I now believe SPX will likely test 1750 in the current downtrend over the next 1-3 weeks with one small but sizable bounce in between. Then, SPX will be free to test 1600 for the April /May bottom projected by my spending indicator.
I just looked back to CY2011 at daily chart downtrends. I found many downtrends that lasted 11 to 20 trading days with 0 to 4 up days (mostly small bounces). In CY2011 and CY2012, there was a 12 day drop with hardly a bounce and a couple 20-22 day drops with only a handful of small bounces. There were similar downtrends in other bull-market years. With SPX in a bear market now, the downtrends could be longer in terms of price and time but mostly price I suspect. The current downtrend has already exceeded previous years point-wise, but it is only 14 days in length from SPX 2082 with a couple minor up days, so another 5-10 days would not be unprecedented at all. Based on recent years, it would appear normal for a "small but sizable" bounce to occur about now followed by a big retracement of the low and most likely lower lows. If so, SPX 1880-1950 is probably the bounce target with that range dropping as SPX drops below 1840. Wood's January cycle projection had 2 options: a bottom last week or a bottom Feb 1 +/- a few days. The latter now looks likely. If so, SPX 1750 is not out of the question in the next couple weeks likely after a sizable bounce. One thing that has marked most bottoms in recent years is either a real TRIN spike or VIX spike. We haven't really had a VIX spike...just steady steps higher in my eyes. October 2015 did. We did have a TRIN spike to 3+ in December allowing the market to hold up into end of year, but there has not been a TRIN spike since this downtrend started. We need one or preferably both to occur before this downtrend will most surely end. I was amazed looking back at many downtrends in the past bear market how price kept dropping without real VIX/TRIN spikes and then reversed once the spikes occur albeit for mere days or weeks in some cases. Good fortune.
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