First, the simple version
SP'monthly, 6yr
SP' monthly, count'2
The big 'if'
If we have peaked at Sp'1422, then this chart - along with similar ones from across the web will be most important. The first question that comes to mind is something that many have wondered for at least a year now.
Q. Is the rally from the March 2009 lows a giant head and shoulders formation?
Yes, it is a very lopsided H/S, and it has become a giant broadening/ascending wedge, but it sure looks like it could be a H/S.
If it is a H/S, then would the RS - which we would presently be in, react the same way as the LS in April/July 2010. Yeah, the first thought would be a 'fast and crazy' decline to the lower channel of 1100 within 4-6 weeks. That seems crazy and highly improbable, but so long as we don't break above 1422...it is one of the viable scenarios to consider.
Of course, the early summer 2010 decline was inspired by none other than the first Greek crisis. Arguably, anyone expecting massive declines in May/June 2012 are going to need a major catalyst. There are ENDLESS macro-economic problems building in the background, but for the market to fall fast and hard, we'll probably need at least a baby black swan. Right now, I can't see one appearing, but as ever we will need to keep our eyes open for such a visitor.
So, with the sp'1390, lets keep the monthly cycle in mind. We have just 3 trading days left of April. Bears will want to keep the market below current levels, so that we'll get at least a moderate sell signal initiated next Tuesday - May'1st.
Goodnight from London