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.

Q & A

Our research suggests that we need to keep our eye on a midterm target (1,563), but focus on short term moves that validate our target. 

Current down-trend should find support at 1,542-1,535-1,512.

As said on March 7, 2013, a close below the recent 1,512 on the $SPX  or  14,030 on the DOW will invalidate our scenario.

First small leg down

As we said yesterday, a small pull back was due today.
That is what we experienced, plus a retracement.
Now we expect a second pullback that may or may not reach deeper than today.
Then, we expect to see new highs.

Waiting for a pull back

We expect 2 pullbacks, a small one right here and a larger one when this leg has completed (another 10 or so points on $SPX upward left). But, life is full of surprises, too.

Market overbought

Market chose scenario #2 from yesterday's write up: gap up + pull back (10 points) followed by a leg up.

Unlike $SPX, $DOW did not make a higher high at EOD; rather its high of 14,413 occurred within the first half hour of trading.

Market is overbought on the hourly and we believe requires a pullback before continuing higher.

We are still expecting a small pull back at this point to test the recent support level of 1,527 - 1,530 on $SPX.

Either a gap down at the opening, which will likely be filled and then eventually move higher, or a gap up which will be sold off.

A close below the recent 1,512 on the $SPX  or  14,030 on the DOW will invalidate our scenario.

Next target: Test support

We are still expecting a small pull-back here, testing the recent support level (1,527 - 1,530).

If $SPX breaks out, then we continue to the next target of 1,565.

A close below the recent 1,512 on the $SPX  or  14,030 on the DOW will invalidate our scenario.

Next target: Test support