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.