Multi-Week Bottom In? Plus Updated Long-Term Chart

SPX fell to 1901, and is trying to reverse. Although I am confident in my long position which I increased today near 60% in size with a cost-average near SPX 1930, I could have been trapped by a rare overnight crash (not talking just 1-3% gaps) that my System avoids based on historical data since CY1987. It is not worth the risk, and I am personally wrong more than my System anyway. There are always more opportunities ahead long and short. So, no matter what opportunity I might miss or how right I think I am, I hereby vow in public to never trade against my System again. Please rain down with an avalanche of boos and hisses if I ever do that again. In this go-around with my updated System, I am currently allowing wiggle-room in position size and risk in that I am only requiring myself to increase and decrease a position as the hourly score fluctuates, so my personal bias could enter the picture to a small degree but definitely NOT against the well-defined trend. I will define trade percentages more tightly later if needed. Wish me luck as predicting reversals is a bad habit I hope to finally break. Consider it a New Year's Resolution to survive and thrive in my 12th year of day-trading.


SPX has bounced 16-22 points 7 times since it was up at 2104. It has made a few smaller bounces too. But, that tells us we should not trust any bounces less than 22 points. 1901+22=1923. Looks like we've already achieved that. The last larger bounce was SPX 1989-->2022=33 points, so we need to exceed that by more than a few points to be more bullish. 1901+33=1934. It just so happens a daily trend reversal will now occur with a daily close above 1936. That makes 1936+ a good level to start believing in a bounce. We only reached 1930 on the late-day bounce today. Depending on how SPX closes once it surpasses 1936, my System will go long +/- that level.


How far will SPX go once it confirms an uptrend? Assuming it occurs in the next day or two, I would look to McClellan's CY2008 analogy and stats regarding other bad starts to the year, and they suggest there is a 50/50 chance that we only get a 2-3 day 2-3% bounce followed by lower lows with the other side of that being a 2-3 week 6-12% bounce. Big difference. Either scenario fits Woods' projection for a 4-6 week cycle bottom this week or next followed by a likely multi-week bounce. I think that all means the SPX 1950s and 1970s will once again be important and possibly rally-stoppers within a couple days. It also places the SPX 1990s squarely in the middle of the 2 scenarios. With OPEX max option pain now falling from SPX 2050 to 2040 and now 2030 the last 2 trading days with further drop probable and with my theory that SPX likes to trade within 1% of max option pain (20pts +/-) on the Wed-Fri of monthly OPEX, I now believe that SPX 1990-2000 has real potential to be reached this week versus my earlier projection of SPX 2040s. Also, my limited data-set regarding the SOS signal favors a rally back up to SPX 2000-2040 within the next week or two. But, looking at all the technical data as a whole, I'd say once the rally fails at SPX 1950s or 1970s or 1990s+ and forms a daily bearish reversal, watch out, because SPX 1867 seems very realistic in short-order with my ultimate target being SPX 1750 or 1600 in April.


I made a few minor updates to my long-term research-based projection chart and posted it below. Good fortune.