MTU Weekend Ed. - Shift (3/23/12 Close)

Recent price actions in SPX suggest that a wave 4-down correction off the October 2011 low or an outright trend change likely has started (Chart 1).

Current target for a wave 4 correction is around 1315-1340.  Note that wave 4 retrace is likely shallow and probably time consuming in order to alternate with the deep and sharp wave 2 retrace.

A decline much below that level would substantially increase the likelihood of a trend change and the recent rise above the long term resistance zone being a fake breakout.   See Chart 2 and discussions in Long term resistance (3/16/12).

Regarding the current decline.  The best count at the moment, in my view, is a zigzag decline followed by an expanded flat rebound (Chart 3, blue). Alternative short term counts are labeled in green and red.

Market Timing Update (3/23/12)

[835am] ES update -

The decline so far has been overlapping. Yesterday's low now another key pivot.
On the bullish side, the low could be in.
On the bearish side, a larger corrective double three or a bearish initial LD decline is still in progress.

Market Timing Update (3/22/12)

[EOD] Stocks -
INDU topped one day earlier than SPX (Chart 1).
From the nominal high, one can count a completed impulse down (9-waves) with slight truncation.  Bearish if the nominal high and the count play out.

From the potential orthodox high in INDU (which is the SPX high), it's a decent completed zigzag. Note that there's a lower low in SPX this afternoon - so no truncation there (Chart 2). A low / the low could be in -  unclear if it is A of a larger correction, a small degree 4th wave, or a 2nd wave pullback.

Chart 3 to the right shows the larger count and various near term options to be resolved.




[1130am] SPX update -


[730am] ES update -

Market Timing Update (3/21/12)

[EOD] Stocks -
If a wave (v)-up is still missing off the March 6th low, wave (iv)-down most likely ended at today's low. We have a i-up and ii-down (expanded flat) going on during the day session.

Today's low (which is a lower low in INDU) appears to be the key, at least for the near term. See Chart 1. Breaking below today's low likely confirms the next down swing.

The alternative positions for wave (iv) down are
(1) March 19th low, followed by a 1/2/1/2 setup.
(2) Today's low going into the close concluding a triangle wave (iv) down.
Both appear less likely.

[1205pm] SPX squiggles -










[820am] ES update -

Market Timing Update (3/20/12)

[EOD] Stocks -
Divergence between NDX which made a higher high and SPX/INDU which likely experienced a corrective rebound. See charts.


[1250am] SPX squiggles -
see the 2nd chart below
[936am] SPX squiggles -
approaching potential 4th wave support


[925am] DAX, ES update -

Market Timing Update (3/19/12)

[EOD] Stocks -
Stretched and an interesting five wave decline from today's high.



[830am] DAX, ES update -
The most recent five up to be counted as complete, especially in DAX.

MTU Weekend Ed - Long term resistance (3/16/12 Close)

long term outlook (SPX)
SP500 broke above its decade long resistance zone recently for a second time during this Hope Rally (Chart 1). This time, the breakout has been accompanied by greater momentum and better progress relative to previously failed attempts since Y2K.

If SP500 can escape this resistance zone or successfully retest it and hold it as support, there should be meaningful upside potential whether the proposed Hope Rally is a corrective cycle wave b-up or a genuine bull run. 

As failed patterns often feed strong moves in the other direction, the sell-off is likely deep and swift should this breakout fail. What are the odds of such failure? Here are some things to keep in mind.

[1]  ECRI  maintains its recession call and makes some good arguments. See "Why ECRI's Recession Call Stands" (3/15/12).

[2] The monthly chart of SP500 is close to register a "death cross".  The blue SMA50 is declining towards the rising red SMA200 in Chart 1.

[3] If the wave structure of the proposed Hope Rally is corrective, whether a simple zigzag (Chart 2 blue) or a double zigzag (Chart 2 red), its approaching its end.  On the other hand, the bull market count is indicated by the green count in Chart 2.

The double zigzag should end as soon as a five wave advance since the November 2011 low ends (see near term outlook below).

The single zigzag has a wave 4 decline followed by a wave 5 advance once a five wave advance since the November 2011 low ends.   Note that [C]=[A] is at 1378 which is the Feb 29th high prior to the Mar 6th low ;  [C]=0.618[A] is at 1443.



long term outlook (NDX)
NDX is coming up against long term trend channel resistance (Chart 3).  And as Chart 4 shows, a five wave advance since its November 2011 low is ending.  If the November 2011 low is indeed the end of wave (4)-down as indicated by the blue count in Chart 3, odds of a reversal around current levels and around the trend channel resistance are favorable.



near term outlook (SPX)
Three near term counts top our list for SP500.
[1] SPX is wrapping up wave (iii)-up of wave [v]-up since the November 2011 low (Chart 5, blue).
[2] SPX is wrapping up the entire wave [v]-up (Chart 5, blue).
[3] There's a smaller chance that wave [iv]-down is still in progress as an expanded flat or a triangle.  Under this interpretation, the current high is wave (b)-up of wave [iv]-down (Chart 5, red).

Chart 6 presents a squiggle count since the March 6th low to accommodate these counts.