One bullish count

If we assume that the top of the market is ahead of us (~1,750), then we are in one of the last legs up.

This last wave then began at the low of June 24 (1,560).

Wave-1 ended on July 1 at 1,626.

Wave-3 ended on July 23 at 1,698.
Alternatively, it ended instead on Aug 2 at 1,709.

This is where the dichotomy is:

If Wave-3 ended at 1,698 (this is where our indicators point to as well as the Fib ratios), then the run up to 1,709 is a Wave-5 that failed prematurely. In this scenario, the market drop since the 1,709 top is bearish, and the a-b-c correction we spoke about yesterday is valid. To this end, we have a 75% retracement of the 1,709-1,627 drop, which is adequate in terms of correction. Therefore, we should see the market unfold downwards in impulsive waves. That would be if for example the tapper is going to happen and at a larger degree, which will signal that the FED is pulling away the juice and the 1,709 top is very significant.

But what if the FED proceeds with tapper light or no tapper at all?

Then we are looking at the bullish scenario introduced above:

Wave-4 ended on Aug 28 at 1,627 (no overlap with the top of Wave-1).
In this scenario, we are in Wave-5 of the uptrend that began on June 24:
This smaller wave-1 ended on at 1,664 during the first few minutes of the Sep 6 trading day.
Subsequently, we have been in wave-3 during the last few days, which is about to end (has a target of 1,702-1,703, but it may have ended already).

Interestingly, in both scenarios (bullish v.s bearish), we are expecting a drop here very soon, as deep as 1,665.

So, until we have clarity of the situation, like I have also heard some big boys say, we should just wait and see how next week will unfold.

Personally, I favor the bearish scenario, but because I am cognizant of my bearish predisposition, I am forcing my self to keep an open mind to the bullish scenario.

Market at crossroads

What we have is either
1) an a-b-c corrective wave up (of larger wave down),
OR
2) a new 1-2-3 wave structure up.

There is no way to tell which one it is right now - we have to wait for next week.

It just happens that the FED meeting will take next week, and depending on their decision and market perception, the market will either go down impulsively, or after a few days of uncertainty, resuming going up towards 1,750 on $SPX, making a new all-time high.

our downwards count in jeopardy

Today's close at 1,671 puts our projections at jeopardy.

Tomorrow will be the telling day, as to whether this is a head fake or we will resume downwards.

The reason we are skeptical about this leg up, despite its impressive strength over the last few days, is that the market is still positioned in a downwards view and is short-term overbought as can be seen from RSI(5) on the daily (not overbought on the hourly however, thinking maybe a higher high first tomorrow before any change).

On the hourly, since the low of 1,627 on Aug 27, we have had an a-b-c up to 1,646, b wave down to 1,628, followed by a five wave c up to 1,672 today. If this count is accurate, it looks like a corrective (upwards) a-b-c of a larger declining wave.

On the daily, so far it looks like a larger A wave down to 1,627, a 50% correction or so to 1,672 so far, and it this is correct, then an anticipated wave down. If the market breaks below the recent 1,627 level, then it will likely test 1,590 or so.

Alternatively, we have an new wave 1 upwards unfolding that may reach 1,690 or so, and which means we should see a precipitous drop of about 50% after it tops off.

Tomorrow will be a telling day.

a-b-c bounce up

From Aug 28 low of 1,627 at the open, we have observed on $SPX an a-b-c structure up: 1,646 - 1,628 - 1,651, with a=c.

On $RUT, the down-trend is more evident with a lower low and a lower high registered today.

On the daily charts, we are observing consolidation of a mid-term down market below the 50 DMA.

AAPL failed to close above $500 again today.

Tomorrow? Hard to predict as volatility is increasing

Trend is down

We have experienced a 2-day bounce here, as the market relieves the oversold pressured from Tuesday's close (RSI < 30 on the hourly at Tue's close).

The bounce was 19 points on the $SPX, in an a-b-c manner: 1,627 - 1,641 - 1,631 - 1,646, with a=c= 14 or so points.  This a-b-c pattern is clearly seen on the hourly using Stoch(14,3,3). Hence, the bounce is behaving so far as a correction of a down-ward wave.

So what is this down-wards wave?

We had a peak at 1,709 on Aug 2, followed by wave A down to 1,684 and wave B upwards to 1,700 on Aug 7-8.  From 1,700 we had an 18 point drop to 1,682 (Aug 13) that we call wave-1 of C down, followed by an upwards rapid retracement to 1,697 (a 75% correction) on the same day: wave-2 behavior. Wave-3 ended at 1,660 on Aug 15, and after a very short wave-4, wave-5 reached the projected 1,640 target. That was Wave-1 of C.

Wave-2 (upwards) spans from 1,639 - to - 1,669 on Aug 22, a 30 point upwards correction, or 50% of Wave-1's drop from 1,700 - to - 1,640. Book perfect.

From that point on we experienced an impulsive drop to 1,627, a characteristic of wave-3 behavior. The 1,669 - 1,627 drop (42 points) is called wave-1 of Wave-3 (down-wards), followed now by an upwards wave-2 correction since Aug 28 of thus far 20 points (or 50% of the 1,669-1,627 Wave-1 drop). This wave-2 may have a little more upside, with a 75% of 42 or 1,659 on the $SPX.

To this end, the market turned down this morning after reaching 1,646 and touched 1,637. Hence this wave-2 may be over, may be not - we do not have confirmation that it ended yet.

All and all, our hourly and daily indicators point down and the weekly chart as well.

Next major down target is 1,580's.

A daily close above 1,670 invalidates our model and projection.

Short term reversal confirmed

Yesterday we said it was a reversal day

Today the down trend was confirmed

All is going according to plan, indicating the Aug 2nd high as significant.

In a provocative way, we had suggested that the April 11 high was a multi-year high, only to be followed by an extension.

Extensions are 5 wave structures: 1,541 - 1,597 -  1,581 - 1,675 - 1,560 - 1,709

We expect this down trend to extend about 150-200 points on the $SPX, reaching the 200 SMA or lower. It is calculated based on the 60 point drop from 1,700 (August 8) to 1,640 (August 21), which we call wave-1 of C, based on which we calculate a target of 1,500 on $SPX.

If our modeling is correct, this short term leg down will reach 1,580. At that lever it will bounce a bit, we will get oversold on RSI and then one more down rapid drop to our lowest target.

Reversal day?

Price action suggests reversal of short-term trend from up to down.

However, we did not have confirmation today - perhaps tomorrow.

Second day of consolidation

$SPX reached 1,665 today, en route to our target of $1,680's.

Waiting for a reversal, which when it happens it will be impulsive - the turn will be sudden

Consolidation began

The anticipate phase of consolidation upwards began today.

It will last a few days and it may reach as high as 1,575 - 1,585 on $SPX.

We need to now wait for confirmation of the 3rd and impulsive wave down

Stay tuned

We finally got the bounce we have been expecting

A bounce upwards here is normal, as we have pointed out previously, the second wave down was ending.

The bounce may be over today, as $DOW closed in the red, or it may continue for a few days potentially reaching as high as 1,680's on the $SPX.

Until we have clarification of what is going to happen after the FED minutes announcement tomorrow at 2:00pm, we will not be able to tell which is the market's next move.

Both $DOW and $SPX remain under their 50 MA and hence anything can happen tomorrow.

We are oversold for now

The markets are oversold on the hourly and $DOW on the daily as well as of today.

So far I have counted 2 waves down from the top, with the last one ending around 1,650 on $SPX.

We had a very short consolidation period (last Friday for a few hours), and then proceeded lower despite the oversold hourly sentiment - this is bearish and I interpret it as fear sinking in (beyond just technical-driven selling).

Interestingly, our indicators continue to point down and on the hourly we had the start of a new wave down. If in fact a 3rd wave down begun already, then our next target down is around 1,625 or bit lower on $SPX, at which the market will be oversold.

Ultimate target for this down turn is around 1,550 on the $SPX, which happens also to be close to the 200 MA.

But before we get this low, we should have a bounce up of some sort around the 1,625 level.

The fact that we have been dropping from the top without any significant pull-up so far, is an ominous sign (bear market ahead?).

consolidation may occur here

As we predicted, markets turned down reaching 1,658 on the $SPX today, encountering short-term oversold conditions.

We are now in an expected consolidation stage, that may be very shallow, may have already ended or may drive the indices upwards over the next few days. $SPX 1,620 is our next down target following completion of the anticipated consolidation.

Trend is still down

Despite the impressive come back this morning following a FED speech, our indicators suggest that we are still in a down trend.

Tomorrow will be critical, as it will show whether today's up will become a midterm trend, or whether we will resume downwards.

Trend is down

The trend is down on the daily as well as the hourly.

another leg down started

The start of another leg down was confirmed today on the hourly $SPX.

Target is 1,675 - 1,660.

A close above 1,700 invalidates the projection.

Trend is down

As we predicted last weekend, a down turn ensued this week.

What we have experienced today is a 24 point drop on the $SPX, which can be predicted from last Friday's wave from 1,709 down to 1,703.

As expected, we have retraced upwards since 10:30am when $SPX hit 1,685. This retracement can stop right here, or continue until it reaches 1,697 - 1,703.

In the hourly charts, what we have is a an upwards retracement that has not completed yet, we need to wait for tomorrow or the next day to see what happens.

Next down target is 1,657 or so.

Market getting overbought

After the recent advance, the market is getting overbought.

If we consider the April 18 low as significant, then wave-1 would be ending on April 30, 2013, for 60+ points.

Wave-2 was short and ended on May 1, followed by wave 3 that reached on May 22 1,687.

Wave-4 ended on June 24.

Wave-5 is projected to end at a range 1,710 - 1,742, which will likely occur next week.

The trend is down, but ...

Today, hourly $SPX charts also signaled that this recent short term uptrend had ended (with the exception of one indicator). On the daily charts, $SPX remains negative, along with the other major indices.

Having said that, the next few days are critical for the market, as the news from the FED and GDP will likely to influence what happens next.

For example, we may be dealing with the beginning of a new mid-term down trend with deep targets on the $SPX, or if the markets turn positive tomorrow, the beginning of a new uptrend worth 140 points on the $SPX.

In other words, we need to wait 1-2 days to see what happens.

Trend continues down

All indices closed in the red today.

Hourly charts ended mixed, where as daily charts were negative, as well as were the market internals.

It appears that we are in wave 3 of "c" down, although it is not yet confirmed.

Next target for this wave is 1,660 or so.

Trend is down

Despite $SPX's gain today (+2), all our daily indicators remained in negative configuration. On the hourly charts, we see the end of a short term down wave and the unfolding of a up wave.

Market internals were also negative; for example: 3,328 losers for 2,581 gainers.

Wave 1 of "c" appears to have completed today at a low of 1,676 (not yesterday or Wednesday).
Wave-2 of "c" is underway and should end between 1,690 and 1,693 or so.

After that, if our model is correct, we should see the markets drop impulsively, targeting 1,660 or so.

Interestingly, $SPX made a lower low and then ended higher than yesterday's high; in contrast, ES/ futures also made a lower low, but did not break out above yesterday's high. NASDAQ broke out like $SPX (even more so), whereas DJIA was even with yesterday's high, and the broader Russel 3000 did not breakout above yesterday and the small caps' Russel 2000 index remained well below yesterday's high.

Next: Market will go a bit higher, if that, before it turns impulsively lower.

Trend is down

All of our indicators point downwards.

That means that if we have a gap up tomorrow, we expect that it will be sold off, resulting in a drop of the indices.

It looks that wave-1 of "c" ended today (versus yesterday) at 1,680 on the $SPX.

Next target 1,640

Short term: A down-trend started today: On the 15min chart, we see wave "a" yesterday (1,698 - 1,691), "b" (1,691 - 1,698) today and then "c" began downwards right after the opening.

The last wave "c" will have 5 waves:
- Wave 1 completed today (1,698 - 1,682)
- Wave 2 is underway (or has completed)
- Wave 3 will unfold tomorrow
- Wave 4 a shallow retraction, and
- Wave 5 targeting 1,640 (which is also the 50 EMA on $SPX daily charts).

head fake ?

Although we had all time high closings for $DJIA , $RUT and $SPX, coupled with a valid breakout above recent levels of resistance, none of our indicators turned short term bullish.

Therefore, we are treating today's move with caution.

For this to be a new uptrend (for 60 or more points on the $SPX), today's low must hold and our indicators must turn bullish.

Market looking for a catalyst to determine its next move

The end of the recent uptrend (2 waves: June 24 - July 1, and July 3 - July 15) was confirmed today.

The market tried to break out today, but failed.

It did not break down, either.

The market is looking for the next reason to move up or down.

Start of a short term down trend

Today we had confirmation on all major market indices of the beginning of a new wave down.

Our previous projection for a interim top in the 1,660's was a bit short of the 1,684 on the $SPX that actual experienced.

It is still unclear, despite the call for a wave down, whether this is a wave 4 or wave "c" of a retracement just ended and now we will have an impulsive wave 3 down.

The test will be a close above the recent top of 1,684.

The market may resemble what we say in July 2011.

Potential short term top

Next week will show whether today's close will serve as a top of some sort.

What we have experienced is two waves of 60+ points each that could either be an a-b-c retracement of a larger wave down, or an 1-2-3 of a new larger wave up.

Today is unclear what the mid term direction of the market will be. The direction will likely be dictated by earnings and Fed policy speculation.

Need to wait for next week - today is a day to pause.

The weekly charts turned bullish, but our favorite indicator spy:vxx is signaling a down move in the near future.

Target met

Today $SPX met and exceed some our target range of 1,660 on FED comments.

Tomorrow a couple of big banks report quarterly earnings - it will be an important day.

At this point, we have to wait and see what happens tomorrow!

Short term trend is up

The uptrend continued today as expected, en route to reach 1,660's on the $SPX.

Mid-term predictions as detailed in yesterday's blog.

1,660's target

We have decided that we will report out thoughts on market action distinctly for short term (we study the daily charts and look for confirmation on the hourly charts) and medium term time frames (we look at weekly and monthly charts - see June 28 report on the status of these). Hence, starting today, we will express these thoughts separately.

Medium Term: Until proven otherwise, we advocate that the market experienced a significant top on May 22 at 1,687 on the $SPX. We believe that the market is unfolding downwards since then, exerting several upwards retracements and concurrently displaying increased volatility (compared to the period from April 19 - to - May 22). Therefore, waves up for us are corrective retracements, until proven otherwise.

Short Term: We are in an uptrend since 1,560 of June 24, 2013. We interpret market action as a wave "a" up (1,560-1,626), wave "b" (1,626-1,604) down, and now wave "c" (started on July 3). Wave "a" was 60 or so points on the $SPX and consequently we anticipate a 60 point move upwards from 1,604, which we anticipate to bring the market  to our target of 1,660's. However, this wave can fail at any time now.

Depending on each person's personality, some follow short term and others follow medium trend signals.

DISCLAIMER This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only

Short term uptrend

Today all our indicators turned positive.

$SPX closed above its 50 DMA. $RUT is the most bullish average.

We are in a wave up, targeting 1,660 or so.

Waiting for a catalyst

The trend is down, despite the fact that we have experienced a upwards retracement and are having difficulty dropping impulsively lower. During the last 3 days, we have observed lower highs and lower lows.

Also, our moving averages indicator EMA(13), EMA(21) and EMA(34) are in a negative configuration, with the price below EMA(21) and EMA(34).

What we need to experience is a catalyst to produce an impulsive wave down, which will generate confirmation on the daily charts. The hourly charts remain in negative configuration.

Reversal day?

We continue to have confirmation on the hourly charts ($SPX & $DJIA) of the beginning of a new wave down.

Today, we also received confirmation of a down trend on our favorite SPY:VXX ratio.
Also, bonds stopped falling and new money is coming into them - perhaps a bearish sign. Interestingly, DJIA is more bearish that $SPX and $RUT.

However, we do NOT have confirmation of a down trend on the daily charts.

All and all, our uptrend that started on June 24 likely ended yesterday and we are awaiting for confirmation of a new down wave.

Target for this new down trend when it materializes is 1,530 or a bit lower.

Waiting for the uptrend to end

There is not much new to add to our analysis for last Friday.

We advocate that we are approaching the end of this upwards retracement and we anticipate that we will soon resume downwards action.

On the hourly, $SPX moved from last Friday's negative closing to positive momentum and then closed negative again. $SPX on the daily has not given us confirmation of a downwards wave yet. $DJIA is again less bullish that $SPX (like last Friday).

Until we get a significant drop that will generate confirmation of a new short term down trend, we can only point out that our indicators suggest that the current uptrend is coming to an end. 

Reversal Day and Month

We have confirmation on the hourly chart that a new short-term wave down began at closing. As I am writing this, ES futures also turned downwards displaying the beginning of a new short down-trend wave on their hourly chart.

On the daily chart, we observe $SPX transversing the 50 EMA from above to below and closing below this important moving average ($DJI behavior was even more bearish). 

We use Stoch(5,3) in a down trend market to detect the end of upwards retracements: indicator action  suggests that the recent upwards move that started on June 24 may have ended today. 

In both $SPX and ES daily charts we await for confirmation of a new wave down (we do not have confirmation of trend change in the daily like we see on the hourly chart).

Also, we had a significant trend change in the monthly chart today: June displayed a change of direction downwards, of an uptrend that began in January 2013, after hitting overbought in May 2013. To this end, weekly $SPX charts show a downward trend  since the week of May 20, 2013.

All and all, we are waiting for confirmation of a new down trend on the daily chart will signal the beginning of a decline towards 1,500 on the $SPX - perhaps next week. 

DISCLAIMER This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Waiting for the market to turn lower again

We are waiting for confirmation that the recent upwards move has ended and the down-trend has resumed. We do not have confirmation of this change yet.

Overall, we advocate that the last days up move is a retracement of a larger move down, targeting 1,530 or a bit lower.

Short term oversold

The market has experienced an impulsive wave down, exactly as we described our expectations in the last few posts.

Currently, we are oversold in a number of ways ( ie on the hourly chart) and hence we may see a bounce up tomorrow.

All major indices pierced through their respective 50 DMA, a sign calling usually for another 5% correction (below the 50 DMA). 

Target for this wave is 1,530-1,540, which represents a series of lows from March and April and a high from February. Also, is -5% from the 50 DMA. Also is very close to the 10% correction from the last May high. Also, when this occurs, we will likely hit oversold on the daily charts.

Short term uptrend may be close to an end

The last uptrend that started on June 13 has now displayed an a-b-c pattern up:

1,608 - 1,639 - 1,623 - 1,654. Each of a and c have subdivided into 5 small waves, and b into 3.

From a quantitative technical analysis aspect, we may (or not) have a higher high tomorrow (as high a 1,665), which is then expected to reverse lower. 

From a fundamentals point of view, the last rally is in anticipation of positive news from the FED (that QE will continue).

However, Gold, Silver as well as Copper signal deflationary trends: Gold + Silver point to QE tapper and Copper+Silver signal to a China slow down. In fact, these metals are almost touching their recent lows. Therefore, the main power levitating stocks is the prospect of more free money from the FED: When/if the FED cuts back, stocks will also come back down. As the market is a 6 month or so forward looking indicator, any sign of FED cut back later in the year may have an effect on stocks sooner than later.

The trend is down

Both in the daily chart and the hourly chart, the trend remained down.

We do not have confirmation, yet, of a new impulsive wave down (in hourly and daily charts).

We would like to see a precipitous drop (massive selling) in order to confirm that the market will dip significantly lower.

Trend down or reversal day

As we claimed yesterday, the market dipped right after the open towards 1,600 (reached 1,608 or so) and then as predicted rallied upwards.

There are 2 possibilities.
1) The market reversed and will continue to rally higher, finding short term support on the 50 day moving average
2) the market trend continues down, and today was a relief rally in a down trend.

Analysis of the daily chart at today's close depicts at this point that we are in a down trend. Analysis of the hourly charts also at this point has not yet confirmed a larger trend reversal. If our analyses are correct, the sharp uptrend reversal today could be explained as a small degree wave-2 (corrective) of a larger 5 wave down structure, aiming much lower.

If our prediction is correct, we should soon see a sharp reversal lower, showing impulsive (wave-3 type of) characteristics

The trend is down

We are en route to touch the recent low of 1,600 on the $SPX, which will coin side with oversold conditions on the hourly chart (probably tomorrow after the opening).

After that, we should have a bounce upwards, followed by another leg down to mid 1,500's.

The trend is down

The short-term upwards retracement appears to have completed in 3 days (prediction was for 1-4 days), approaching 52% of the 1,648-1,623 leg down.

The immediate target for this down leg is again 1,600 on $SPX.

After that, we will have a shallow bounce up, followed by another dip: this last dip may reach as far as 1,565-1,575, but it is too early to call with precision.

Possible reversal day

We have been advocating that this last few days move up is a retracement of a larger decline.

We called it wave-4 of "c", with a target of 1,640 or bit higher (as high as 1,660). We also said that it would last 1-4 trading days.

If our model is correct, then we would have another leg down, below the recent 1,598 low from last week.

Tomorrow could be another tight range day.

Rebound yesterday+today after 2 legs down

The upwards move that started yesterday at 1:00pm and continued today is perfectly normal - it started right after $SPX hit oversold on the hourly chart.

As we explained yesterday, this is wave-4 of "c": Our target for this wave is 1,640-1,662 (1,644 today).

We will spend 1-4 trading days in this wave and then expect to turn downwards again (wave-5 of "c"). 

1,600 target met

As we have been advocating for a while, the market did in fact meet our $1,600 target today (1,598), and then started to move higher.

What we have experienced so far is:

- wave "a" :  May 22 - May 24

- wave "b" : May 25 - May 28

- wave "c" :  wave-1   => 1,674 - 1,640

                     wave-2   => 1,640 - 1,661

                     wave-3   => 1,661 - 1,598

                     wave-4   => 1,598 - current

As of 13:00 today, we are in wave-4 of "c". This is a consolidation wave (with an upwards bias), whereby those shorting will close their positions (as the market reverses) and some others will initiate long positions (thinking that they are buying the dip of a new trend). This will go on for 1-4 trading days and may reach 1,640 or a bit higher.

After the market completes wave-4 of "c", it will likely turn down again, with a target of 1,560 or a bit lower.

The trend is down

$SPX touched a low of 1,607 today, reaching oversold conditions, and very close to our target of 1,600's. 

Interestingly, $SPX bounced on the EMA(50) and closed at the low of the day.

Overnight, we may have a relief bounce up, or more selling - it is just not clear how we will open tomorrow.  It is possible that tomorrow we reach up to 1,622-1,645, although there will most likely see more selling ahead of us.

The trend is down

Today's price action on the $SPX suggests that this down wave is subdividing into smaller waves. 

We are still expecting one more leg down to 1,600 or so at this time.

It is not clear, however, if tomorrow the market will gap down and touch 1,600 (reaching oversold on the hourly chart), or whether it will open and move higher, before it resumes the down direction again. 

The trend is down

The market ($spx) reached oversold on the hourly as it descended to 1,622 or so this morning.

Then the market started to rebound.

When this rebound ends, another leg down is anticipated.

The Trend is Down

Today's price action on the $SPX hourly chart confirmed that:

(1) wave-2 of "c" did in fact completed yesterday as suggested, and 

(2) an impulsive wave-3 of "c" is in progress. To this end, the recent $SPX floor of 1,635-1,640 was broken during the last hour of trading today.

The target of this wave-3 of "c" is 1,600 on the $SPX, which served as resistance during April. 

The trend is down

$SPX chose option "(1)" from yesterday, to move higher today, reaching 1,662 or 65% retracement, as part of wave-2 of "c".

Price action during the last hour of trading and into the close suggests that wave-2 of "c" is now complete and wave-3 of "c" appears to have begun, but without confirmation yet.

If our prediction is correct, we should see impulsive moves down going forward, with the previous resistance level possible target of this leg down.

As the trend unfolds, we will be able to define the target with more accuracy.

The trend is down

What we experienced in the last few trading days is a wave "a" down, a wave "b" up that retraced 75% of wave "a", and today the completion of wave-1 of "c" down during the morning floor trading hours.

We also experienced wave-2 of "c" (upwards direction), which is not clear if it has completed.

Therefore tomorrow Thursday, we may (1) see the market higher than today's high (suggesting that wave-2 up is still unfolding), or (2) we may move impulsively down (suggesting that wave-2 finished today and wave-3 started already and was unfolding into the close).

Retracement of a down-trend versus new up-trend

As we mentioned in the previous blog, we expected $SPX to "go higher".

What we just had today was a 75% retracement of the 1,687 - 1,653 leg down from last week.

The question is whether today's move (up) is the beginning of a new leg up (that could go for another 60 points), or was this the "b" (retracement) of an a-b-c down? In this case, "a' would be an irregular-flat.

To answer our question, we looked at the $SPX daily and hourly charts:

- Daily: Indicators (MACD+stochastics) on this chart suggest that we are in a down-trend and hence today's "bounce up"is part of a larger wave down (a-b-c).

-Hourly: We do not have yet confirmation for exhaustion of this leg up that started last Thursday at 1,535, not the beginning of a new leg down ("c" wave).

Overall, we favor reading direction on daily charts and confirming signals on the hourly

Trend is down

What we experienced in just 2 days is a leg down of 52 points on the $SPX (1,687 - 1,635). This leg subdivides in 5 smaller waves in the hourly.

At 10:00 am today, $SPX hit oversold on the hourly and the shorts covered - this down leg was over!

The market spent the rest of the day recovering from the drop, as expected. The retracement today was 38% (20 points), which means that the market may retrace even higher tomorrow. 

When the market turns downwards again (second leg down not confirmed at this point), it will hit as low as ~1,600's, finding support at a level that previously acted as resistance (April high). 

On our way to support

We expect that $SPX will reach as deep as the previous April high, where it should find temporary support.

Extension under way

First of all, I apologize for being unable to keep up daily with the blog.

We are in an extension wave that started on April 19, 2013.

Extensions usually subdivide into 5 waves.

This is what has occurred so far:

1st leg up : April 19 - April 25 (1,536 - 1,592)

small pullback: April 26 (1,592 - 1,577)

2nd leg up : started April 26 and has been on going.

Quantitative analysis suggests that this 2nd leg up will end around current $SPX levels and another pullback will occur, perhaps as deep as 1,617 (backtesting the recent breakout area of May 3).

After this pullback, the market will attempt to resume the uptrend. This 3rd leg up may fail at any time and has the potential of reaching 1,725!

We believe that the upcoming FED meeting and the chatter about tapering the bond buying program is what will trigger market behavior in the coming weeks. Also fear of an upcoming tapering of bond buying may cause participants to sell (causing the anticipated pullback mentioned above).

We are in the final stages of an extension

With the FED pumping a ton of money into the markets every day, it should be recognized understandable that there is an upwards bias in the stock market as well.

Two events of the last week may signal that things are about to change: 

(1) CNBC on Thursday, through Pisani, generated new information about a rumor that the FED was going to taper down their liquidity pumping. 

(2) After the close on Friday and a new historic close (high), the Wall Street Journal's Jon Hilsenrath with an article in the on-line publication (after hours) reported on exactly that, a plan by the FED to reduce their purchases due to an improving economy (http://www.marketwatch.com/story/fed-maps-exit-from-stimulus-2013-05-10-191031815?link=MW_home_latest_news).

Interestingly, a week ago Friday (May 2), the bonds did a 180 degree turn, and changed their direction: The price of bonds has been falling since then ($TNX increasing) in a rapid manner. This is significant because bonds were just last week at historic highs, resulting from FED buying action. Bond holders started selling in anticipation of a FED exit, perhaps. 

In conclusion, we may have upon us a significant event, the end of aggressive monetary policy which started at the dark days of the 2008-2009 recession and financial crisis.

For the stock market, our quantitative analysis has been indicating a multi-year top around the current levels. However, with the current extension (it is visible on the MACD of daily charts), the actual top may be difficult to accurately pin point. 

In terms of self analysis, please refer to last Sunday's graph which was pointing to a high in the 1,636 area and then a retracement to 1,485 - 1,500's (which is also the anticipated 10% correction that everyone is talking about). 

The $SPX made an all time high close yesterday. Look here for an explanation of how this was accomplished by the robotic computers that run our markets: http://www.zerohedge.com/news/2013-05-10/how-manufacture-record-high-stock-market-close-friday-afternoon

As I mentioned a week ago, we may be "too late to go long and too early to go short".

DISCLAIMER 

This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

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Short term trend is down

Both $SPX and $DOW signal short term down trends today on the daily charts as well as on the hourly.

What we experienced today was a retracement of yesterday's leg down.

New all time high

$SPX and $DOW continue to clock all time highs.

We are only a few points before the upper end of our projected target (~1,536) qualifying from both last November's low as well as from the March 2009 low.

RSI(14) is also approaching overbought on the daily and is in overbought territory on the hourly for $SPX. Also the bonds picked up a bit today, indicate buying others than the FED.

Our short term trading indicator, SPY:VXX on the hourly has also signaled that the current leg up (since May 2) has probably ended. Although this is a good indicator, it is not enough, however, without a confirmation on the daily charts.

Time will tell in a few days, perhaps as soon as tomorrow morning with new unemployment claims.

The macro is expected to deteriorate because of the Federal government sequestration. Claims are real time data on a weekly basis, unlike employment numbers given out once a month. Weekly claims correlate highly with $SPX direction in an inverse manner.  

Till tomorrow

Reached the middle of target range

We have calculated a target range of 1,618 - 1,634, with 1,626.37 the mid-point.

Today $SPX clocked 1,626.03 and then stopped.

Everything seems and feels bullish and euphoric, so from a contrarian point of view, we are worried of a sudden change in direction.

The market can always extend higher beyond the target range into a 5 wave extension, as it has in previous times.

The best comment I heard about this market on TV was ...  "too late to go long, to early to go short".

DISCLAIMER This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

6 month evaluation

Without minimizing our erroneous revision (red) on April 26 of our original prediction (dotted black), the market did reach our target of 1,620 on the $SPX as predicted from last November's low as well as the March 2009 low and advocated on this blog for several months now. The actual target range reaches as high as 1,626.

If our original prediction is in fact correct, then we should see the anticipated 5% + pull-back. If not, we are in an extension.

Let's see what happens.

This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Full analysis Sunday evening

I am on the road traveling, so this is short and before the close.

In brief, I was mistaken by the April 2 - ADP employment report and the accompanying $SPX response. Although $SPX dipped below 1,537, it did not have a daily close below - more importantly, $DOW more accurately displayed was really occurred. This is a rookie error.

Point is, if you look at the projections of our model as presented here before April 2, you will see that the projections called for 1,610-1,620 end target, with today's top at 1,618.46. This is also the end of 5 waves up from the recent low of 1,581 on May 1.

More self evaluation on Sunday.

Non-farm payroll numbers tomorrow

The economic news will apparently tells us tomorrow what will happen to the market.

Today's reversal upwards stopped right at the 1,537 resistance level from April 11, 2013.

Till tomorrow ...

Bull trap !

We have been pretty persistent with our call for a correction, all along this last leg up, no matter how difficult it was to be positioned against main stream media and commentary.

Today we have confirmation for a new leg down both on the daily as well as on the hourly $SPX charts. 

Although exuberant, such upward retracements during corrections are not new, as they can be identified in several occasions in the past  ( as recent as April - May 2012: last year! ).

Bull trap ?

The bulls have been persistent beyond any prediction.

$NDX moved above the recent high; $SPX stopped right at the high; $DOW and $RUT lag.

I guess everyone is waiting for this week's data points to come in, starting tomorrow.

Unless proven otherwise, our model points to the downside.

When the down side scenario evaporates, we will then have to call this leg an extension (not yet).

Till tomorrow. 

In $RUT we trust

$SPX clocked a double top today and failed to break out.

On the hourly and daily charts, $SPX registered overbought before turning lower starting at 2:00 pm.

Also, our forward trend indicator (SPY:VXX) indicated on the hourly chart the start of a new (short-term) wave down at the close.

$RUT analysis on the hourly also indicated that the down-trend that began last Friday is still in play, displaying a a little over 82% retracement upward of Friday's drop.

The bonds were also little changed after their jump last Friday.

We still do not have confirmation on the daily for a new down leg in stock indicies, despite our bearish view for several days now - perhaps tomorrow, "turn around Tuesday".

Weekly performance review

We continue to advocate the scenario that 1,597 on April 11 2013 is an important top, as several waves of different time frames converge in that range (see March 30, 2013 post for analysis).

To this end, we experienced a first leg down to 1,536 on April 18, 2013, the size of which is consistent with this type of waves over the last decade.

Subsequently, we experienced an upward retracement which reached almost 90% of the April 11 - April 18 down wave,  extending our projected range (62-75%). In fact, last spring we saw a 90% upward retracement (by May 1, 2012) of a down market that started on April 1, 2012. Also, similar scenario occurred in Oct 2012. Therefore, the degree of this recent retracement should not be a surprise.

As stated on last Thursday's post, we have confirmation on the $SPX hourly of the beginning of a new wave down since April 25, 2013 and indications on yesterday's daily chart. Perhaps we will have confirmation of this new leg down next Monday.

Based on the data from last Thursday and Friday, our quantitative model projects the next target at 1,560, and after a short bounce, a lower low. More on the down trend targets next week, as new data from $SPX will allow us to calculate our targets more accurately.

This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Trend is Down

Yesterday we reported the beginning of a new wave down starting at 12:00 noon (Thursday).

Today's action support yesterday's prediction of a top of 1,592 on $SPX. Our short term indicators and quantitative wave analysis signal down.

Today's drop was led by small caps, then tech, then SPX and $DOW closed positive (flight to quality). To this end, bonds did very well today, further pointing that money is moving away from risky assets (small caps) and into large cap and fixed income.

Next short term target is 1,560.

Upside action must be over now

Today's positive price action was surprising but not unfamiliar.

The high extended beyond our range, exceeding 75% retracement, which is somewhat rare.

We maintain the position that when the upwards retraction is over, the market will head lower to 1,500.

A daily close above 1,602 would invalidate our scenario.

 

Short term top is in

Today's price action met our projection for a short term high of 1,582 in $SPX, which was announced in last Saturday's plan. 

Now, we would like to see a precipitous drop that should reach the 1,500 range. 

We still need a negative close tomorrow for confirmation of this trend.

Overall, we maintain the position that what we experienced since April 18 is a short term correction upwards of a larger wave down.

A close above 1,602 will invalidate our scenario. 

Bounce up continues

Second day of bounce upwards reaches 71% of total drop from April 11 - 18.

Depending how AAPL quarterly reports does today, we may have one more day up, reaching 1,582 or so (75% retracement see our graph from last Saturday).

Although we are experiencing this up leg, we believe that it is normal to last week's drop.

From a tactical point of view, we would like to see a precipitous drop after this ascend is complete.

A close above the previously stated 1,602 would invalidate our current scenario. 

Short term bounce

Today $SPX briefly entered our projected, from last Friday, short-term target range of 1,565 - 1,575 (1,565.55 to be exact)

When this bounce ends, the market is expected to turn down with a "vengeance".

Review of our model versus market action

We began forward testing of our model in November 2012 and started publishing our findings on this site in January 2013.

Here we review our records and display them for the readers.

This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

The trend is down

We experienced a pull back upwards today, with small caps showing the strongest performance of the major indices.

Interestingly, $SPX close right at yesterday's high, a bearish sign.

The bonds stayed steady.

Although we may experience further upside on Monday (could go as high as 1,565-1,575), the overall trend of this leg, until proven otherwise, is down.

A positive close next Monday may change our short term direction to up, while midterm direction remains down.

Trend is down

The market continued to lose ground, with $SPX closing below its 50 EMA, a bearish sign.

Although the market never moves in a straight line, our next target, as explained yesterday, is in the 1,500's.

Because $SPX has yet to close on the daily chart below the important level of 1,538, and because some of our indicators display oversold levels on the daily charts, the reader should not be taken by surprise if the market moves higher in the near future. 

Trend is down

Our prediction that yesterday's high at closing was an inflection point (end of b) towards further down movement proved accurate by today's drop in the $SPX below last Monday's April's 15 low (1,552). 

To this end, we believe that wave a ended at 1,552 last Monday and wave b ended at 1,575 yesterday (50% retracement of a).

We also advocate that we are in wave c at this time, a tradable wave that will subdivide into 5 smaller waves. To this end, we believe we experienced the end of wave 1 of c today at 1,543 (12:50pm), followed by wave 2 of c (currently underway), which has a target of 1,560 - 1,568 on the $SPX (if not completed today). After completion of wave 2, we will experience wave 3 down (targeting 1,500).

From a tactical point, we are awaiting confirmation that the present (upwards corrective) wave 2 is completed and wave 3 (of c) ensues downwards. 

Medium term target is 1,460 (range of 1,450 - 1,480) on the $SPX

A daily close above 1,576 invalidates the projections above.

DISCLAIMER: This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Short-term trend is down

Both our quantitative analysis as well as trading indicators suggest a down trend.


Price action today displayed a normal 50% retracement, in a form of an a-b-c, almost to the penny, of $SPX's leg down from last Thursday's high of 1,597.35 to yesterday's low of 1,552.28.

The bonds are subdividing into upwards waves, with $TNX remaining below the critical 1.8 level.

We expect the market to turn lower again in the near future, once this upwards retracement is complete. We can not exclude the possibility, however, of further upwards movement on the $SPX(could reach 1,586) as part of this retracement (low probability).

Next down-trend target is 1,505 - 1,530.

A daily close above 1,598 invalidates the above prediction.

As we posted over the weekend, our intermediate target for this down leg was 1,570, which occurred at 12:00 noon today. After a 2 or so points retracement upwards, the market continued to move lower, reaching 1,552 at the close, stopping right at the 34 day EMA. The depth of the drop was beyond our predictions, which is often the case in impulsive waves down, as fear governs the market more than numbers.

At this point, the market is oversold on the hourly, but not on the daily chart. Also, the bonds ticked up but not by a lot, leaving the $TNX at 1.702 at the close. For bonds, we expect the old highs to be tested going forward, which is bearish for stocks.

What happens with stocks in the next day or two, will determine market behavior for the next few weeks.

Market Projection from March 23 versus actual

DISCLAIMER: This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

SHORT-TERM TREND IS DOWN

Today's price action, following yesterday's new all-time high, suggests that we have a possible top of the $SPX at 1,597.35. From this recent high, the bonds have reversed direction upwards since yesterday's drop of $TNX below 1.8 (today it reached 1.719). The action in the bonds is bearish for stocks, as bond price action suggests a re-test of last July's $TNX low of 1.4.

This morning, JPM and WFC reported quarterly results: The market reacted with a down move, reached important technical targets at 1,580, and then retraced to 1,589 at the close (which can certainly go higher next Monday morning). Next week, C and MTB are reporting on Monday, which will tie in with today's JPM and WFC results. 

On the hourly, this wave from 1,597.35 down to 1,580, based on our quantitative modeling,  has a structure of 5 smaller waves.  Hence, we expect that after the completion of the current upwards move that began today at 11:00am, we shall experience another leg down towards 1,570's.

From a tactical point of view, a daily close above 1,602 will invalidate the above scenario.

Market at a top ?

$SPX clocked 1,597.35 today, which falls within our target range (1,589 - 1,602), reaching extremely overbought levels on the hourly chart. To this end, $DOW reached overbought levels on the daily and hourly charts. $NDX did not make a higher high, and $RUT is below its recent highs. $TNX also fell below 1.8 again today.

Since the 11:27am high of 1,597.35, $SPX has made consecutive lower highs and lower lows intra-day.

Tomorrow JPM is reporting and will likely set the tone for the next few days or even weeks.

New highs, but closing on to a top

$SPX is in a 5th wave up (on the hourly) from the recent low of 1,539.5 of April 5 (1,554-1,548-1,573-1,568-now), with a projected target of 1,595 (range of 1,589 - 1,602) for this particular leg up. 

The high today was 1,589.07, so our range has been met. 

In addition, $SPX on the hourly is overbought

Also, $DOW since the 12,884 low of December 31, 2012, was projected to end at 14,854 (range of 14,805 - 14,900).

In conclusion, our models indicate that we may be close to a top here and hence we are skeptical of any movement of the markets much higher. 

Again, as we have been advocating for some time now, we need to wait and see what trend the market confirms.

MARKET TREND UNDECIDED

Although $SPX made a higher-high by $0.23, it did not manage a daily close above the previous high of 1,573.66. This is a condition, as was stated in our previous post, for a new uptrend signal. 

The move from 1,565 to 1,573.89 today was unexpected and presumably due to a short squeeze. 

We maintain our opinion that we need to wait and see, as advocated the last few days, what happens next: (1) A daily close above 1,574 would suggest that we move towards the 1,600-1,620 target, or (2) a move lower would suggest that we aim for the 1,500.

Price action according to published plan

In our last Friday’s analysis and Saturday’s model presentation of hourly $SPX price prediction, we advocated that $SPX had just found short-term support at our March 15, 2013 predicted level of 1,537 (1,539.50 exactly) and that it would bounce back up to the 1,561-1,565 range.

It is 4:00pm EST in the U.S. and $SPX clocked 1,563.03 at the close, hence ending right in the middle our predicted target range of 1,561-1,565 from last week.

In a few minutes, AA will report quarterly earnings, which in our opinion will guide stock market direction over the next few days.  

As we advocated last Friday and Saturday, we are now at a critical point, whereby the market may roll-over to the down-side for lower lows, or breakout above the recent high of 1,573.66 towards 1,600-1,620 range.  

We will have to wait and see what happens next before we can conclusive discern the market’s next move, although we feel that we are heading lower.

UPDATED  HOURLY  MODEL

THE MARKET MAY BE ROLLING OVER

$SPX displayed a 5-wave down from 1,573 - to - 1,549, then a short pull-back upwards to 1,562, followed by another leg down, reaching this morning 1,539 at oversold levels on the hourly.

Interestingly, the market did not breach the 1,537 level we have been advocating for sometime now. Another characteristic of the market is that the bonds ($TNX) reached overbought levels today.

Now, we are in the midst of a leg upwards that started at today's low and will highly likely reach the 1,561 - 1,565 range.

What happens next at that junction (1561-1565) is critical.

If the market turns down again, then we will reach much deeper levels on the $SPX.

If the market breaks out above the recent high of 1,573, then we will reach the aforementioned 1,600-1,620 range.

The negative fundamentals over the last days, including the weak employment numbers today, suggest that the market may be rolling over to the down-side. If earnings next week starting with AA are also weak, we will likely move downwards. To this end, some large transports have already reported weak numbers and guidance thus far.

In conclusion, it is our current position that the market has began to roll-over to the down-side before reaching our target of 1,600's because of negative economic data. To this end, we believe we experienced the first wave down from 1,573 - to - 1,539 and we are due for a correction upwards to 1,561-1,565, following which we will head lower: First stop will be in the area of 1,500. 

A close above the recent high of 1,574 will invalidate our scenario

TREND IS DOWN

We assume that the recent high of 1,573.66 will hold (unless otherwise proven) and that the market will exhibit impulsive waves down along with corrections upwards. Today was a "corrective" day.

To this end, $TNX broke below the 1.80 support (holding since the beginning of January), a finding that corroborates with our observations on $SPX. This means that bonds will increase in value.

As the market unfolds we will be able in the near future to discern its intermediate direction as well as begin to make predictions for $SPX targets.

Uptrend in danger

Today's close below 1,558 signals that the current leg up we have been tracking since the recent low of 1,578 may have ended early.

At this point we consider our model upwards to 1,600's invalidated and we are watching 1,537.

Before we can confirming a top here, we need to watch market action for a while.

We will be looking for impalsive waves down followed by corrections that will not exceed the recent high.

On our way to 1,580's

$SPX is subdividing according to our prediction model first presented on March 23 (as well as yesterday).

Today's breakout above the recent high of 1,570 further validates our model thus far (including  the recent low of 1,558 as discussed yesterday).

Next target: 1,582 (range of 1,580-1,585).

A daily close below the recent low of 1,558 invalidates our March 23 model.

 

Trend is up

On Saturday March 23, 2013, we published our hourly model for $SPX from the 1,538 low to our projected target of 1,616 (range of 1,600-1,620).

Our model called for a interim high of 1,567 (range of 1,565 - 1,570), which in fact occurred last Thursday March 28, 2013 at the high end of our range (1,570).

Then our model called for a dip to 1,561 (range of 1,558 - 1,564), which occurred today.

Therefore, $SPX is subdividing appropriately and according to our predictive model, en route as we believe to a higher high (1,582 with a range of 1,580 - 1,585). From there, we will dip towards 1,571, and subsequently to new all-time highs (1,600-1,620).

A daily close below 1,537 would invalidate the above model.



DISCLAIMER: This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Multi year uptrend target range is projected at 1,600-1,620

The current bull market began on March 9, 2009 from a low of 667 on $SPX. The first wave up ended at 956 on June 8, 2009 (289 points). Based on this first leg up, our model projects 1,602 – 1,604 as the multi year uptrend high on $SPX.

The current uptrend that began on December 31, 2012 at 1,398.11 is projected to end 1,618 – 1,624.

The leg of the uptrend that began on February 26, 2013 at 1,485 is projected to end at 1,617.

The last leg of the uptrend that began on March 19, 2013 at 1,538.57 is projected to end at 1,616.

In conclusion, our analysis suggests the convergence of many different waves, starting as early as March 9, 2009 and as late as March 19, 2013, at the range of 1,600 – 1,620.

The length,in terms of time, of this bull run that started in March 2009 is now just over 4 years. The average length of bull markets over the last century is 3.8 years (median = 3.6 years). Therefore, we may be dealing with a "mature bull that may be getting tired of running".


A close below 1,537 invalidates the above mentioned target.

DISCLAIMER: This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Trend is up

Today's breakout suggests that our previous call for a short-term low of 1,487 and subsequent high of 1,563 and then a new short-term low of 1,537 were accurate.

On March 22, our model confirmed the start of a new leg up and predicted a breakout above the recent high of 1,563. This happened today.

Our model predicts that the market will probably reach 1,610's as presented on March 23.

A close below 1,537 would invalidate our scenario.




DISCLAIMER: This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Trend is still up

We have made another higher low today in $SPX, $DOW and $NDX.

The market will soon let us know whether it will break out to the upside or not of this triangle under formation, perhaps as soon as the end of this week.

A daily close below below $1,537 will invalidate our uptrend scenario to new highs.

The trend is up

We continue to advocate for our prediction that $SPX will soon make a new all time high according to last weekend's price model.

A daily close below 1,537 would invalidate this scenario

Market choppy, but trend is up

Both $SPX and $DOW have made higher highs and higher lows since the short-term bottom of March 19.

A daily close below 1,537 on the $SPX would invalidate the current uptrend scenario

$SPX Model

A daily close below 1,537 would invalidate the scenario below and suggest market rolling-over to the down-side

DISCLAIMER: This blog shall not be perceived as investment advice. This is a personal diary of our thoughts on the markets. Consult a professional broker or adviser before investing.  Any opinions, news, research, analyses, prices, or other information contained on this blog are shared as personal thoughts and provided as general commentary only.

Trend continuous up

Today, we received confirmation for this leg up that started after our accurate prediction a week ago (March 15) of the recent short-term low 1,537 on $SPX that occurred on March 19 (1,538.57-actual).

Our model, as presented on Saturday March 16, calls for a short term target of 1,610-1,620 on $SPX.

A daily close below 1,537 would invalidate this scenario and suggest that the market rolled-over to the down-side 

Trend is still up until daily close below 1,537 on $SPX

Price action today was a correction of approximately 78% of the move from Tuesday's low to Wednesday's high.

Our model indicates that if the trend is still up, we should see a higher high soon.

If we close below 1,537, our model suggests that the market is rolling over to the down side.

Confirmation of new uptrend

Today's price action suggests the start of a new uptrend, with a potential target of 1,610-1,620, or a bit higher, on the $SPX. 

This new uptrend was confirmed on the DOW (made a higher high), but not $SPX. This scenario reminds us the May 1, 2012 scenario, following which the market rolled-over lower.

A close below the recent low (1,537) will invalidate the above scenario and suggest that the market is rolling over to the down side.

One more leg up - maybe

As we stated yesterday in our afternoon posting, we expected to have a gap up followed by a sell off that would reach 1,537.34. 

Today's price action confirmed our prediction and reached as low as 1,538.57 on $SPX. 

Our model predicts one more leg up to 1,620's on the $SPX (see weekend graph).

A close below 1,537 invalidates our prediction and suggests that the market has rolled-over to the down-side.

First leg down

We accurately predicted a short-term top last Thursday and the beginning of a correction last Friday.

Today, we experienced the first leg down of an ABC correction to 1,545 along with a retracement to 1,558.

We expect a second leg down to approximately 1,537, even if we have a gap up at the open tomorrow.

Our computer model projection

Short term down trend began

We have been noting since February 28, when we predicted the start of the present wave, that it would end in the range of 1,560's (1,563) on the $SPX.

Yesterday we clearly called the short term top.

Today, the market started a downward correction.

Our computer model calls for 1,537.43 as the short -term target of this downtrend.

Short term uptrend target reached on $SPX

We clocked 1,563.23 at EOD today, which falls in our target range for this uptrend, as we have previously defined. Also, RSI on the daily and hourly was above 70 at closing.

The market can certainly extend higher, or could reverse lower heading lower.

For us, this leg has almost completed (and we are waiting for a pull back).

No breakout

As said yesterday, a new leg down following yesterday's EOD retracement occurred early today after the opening, which did not register a lower low.

Neither the DOW nor SPX broke out upwards from their recent highs (SPY did however by $0.02), indicating an "inside day" (suggesting to us lack of commitment).

If what we saw was an ABC up (almost 92% retracement on the DOW) we should then have another leg down that will reach deeper.

We will have to wait until perhaps tomorrow to see whether the next move will be (gap) up or down.