Baring new highs sp'>1422, I continue to seek the original target zone of sp'1150/00.
sp' monthly, scenarios
Sp, fib levels - daily
The above Fib' chart was inspired by Daneric The basic premise remains that we are in a large bear flag ( a wave'2), and that when it does break - the current key level is 1330 (but rising each day), the downside target is significantly lower.
On any basis, sp'1225/00 seems a very valid near term target for a wave'3. However, the 1.6x fib of wave'1 provides an even starker target of sp'1170 ! That is just a touch shy of my original target zone of 1150/00. Remember, its entirely possible the entire cycle lower will be comprised of 5 waves (labelled blue), and we're still only at 2! So, if 3 can breach 1200, there is a good opportunity for final wave'5 to hit the low 1100s. At that point, I'd expect the printer man to appear.
Summary
I hold to my original best guess of scenario 'B', as in Bernanke. However, there is a VERY dangerous issue - from the bearish outlook, in that we may floor around sp'1200. There is rising trend support from the 2009 low, all the way up to 1200 in the coming months.
If we're 'only' at 1200 at the time of the next FOMC announcement (Wed' Aug' 1st), then that might be it. If QE3 is announced at that time, then we could indeed ramp from 1200..and trundle to new highs later this year - or spring 2013.
The 'doomer bears', those looking for sp<1000 this autumn, will arguably need to see sp'1125/00 this August, just to have even a tiny hope of much deeper collapse levels in Oct/November. Anyway, first we need to decisively break the bear flag, and go sub'1300 again.
Today was a real trial to be part of, hopefully Wednesday will be somewhat less demanding.
Goodnight from London