Sunday, February 10, 2013

MTU Weekend Ed. - Sideways Consolidation (2/8/13 Close)

SP500 advanced another 0.35% (or 4.8 index points) this past week, despite a relatively wide intra-week range from 1495.02 to 1518.31 (or 1.56%). This continues to be consistent with our assessment that the net near term upside potential is likely limited without a pullback either in price or consolidation in time.

However, the sideways price action over recent weeks may serve to satisfy the expectation of a consolidation in time, given Friday's upside breakout to 1518.31 in SP500.   

The breakout has raised the likelihood that the consolidation over the past two weeks is a small-degree wave [iv].  The proposed wave [iv] either ended last week (Chart 1 blue [iv]) or is missing a wave-E of an expanding triangle (Chart 1 green [iv]) or missing a wave-C of a flat (Chart 1 red (X)).   The former projects a near term terminal wave [v]-up already in progress and the latter suggests a quick and range-busting pullback to the 1490 area in SP500.

Meanwhile, the prospects of a near term breakout does not yet alter the large price structure, which is updated in Chart 2. Please see Monthly Outlook Update (2/1/13) for discussions.