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! ).