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.