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.