The SP' closed Friday at 1353, that is a mere 10pts above the Wednesday low of 1343. We do seem to be putting in lower highs and lower lows - a vital aspect that the bears will need to see for any mid-term bearish cycle across this summer.
SP'60min, H/S formation
It has been especially pleasing to see this type of H/S outlook appear in many other chart sites/blogs this week. It is good confirmation that I'm quite likely onto something too.
SP'60min - count'2
You can see the severe resistance zone of 1380/85 that the bulls face in any bounce this coming week. The MACD (blue bar histogram) cycle is suggesting a move to negative cycle at the Monday open, if that's the case, then there could indeed be a pretty red morning - not least if we break the previous low of 1343.
For the moment, the bear flag, with ABC waves forming the wave'2, remains my outlook.
SP'Daily, bearish outlook
The daily bearish outlook is still looking good - especially when taken together with the weekly and monthly cycles - which offer a potential 2-5 months further downside. From a MACD cycle perspective though, we are pretty low on the cycle, a few days rallying to the 1380 level would be very much viable - whilst still holding within what is currently a 3 day bear flag.
The critical levels, lets look at this from both sides
A break under 1343 would be pretty bad, and suggest 1340 is likely to fail, opening up 1300, even 1270 within the very near term. Bulls will be eager to clear back above the floor of the baby H/S - 1395. If we see 1395/1400, bulls will start piling in, and will charge for a new high >1422, 1450/60s would then be the first major target.
A few up days would not ruin the current down trend, and indeed would help to better reset both the 15 and 60minute cycles. A high early Tuesday would be especially good, having got the April retail sales data out of the way. That would open up a moderate fall into opex Friday, with the bigger fall to sub 1340, and then 1300 next week. Right now, only a move above 1422 would completely wreck the bigger bearish trends. A move over 1395 would be a real problem though.
Stops! ...are kinda good.
Regardless of where we open Monday morning, the short-stop levels for the 'serious money' are very clear
1. very loose...1395/1400
2. tight 1365/70
I'm looking forward to a pretty dynamic week ahead, once we get past Tuesday mornings Retail data - the only major econ-data of the week, I think by then we'll have a good understanding of where the market is headed for the rest of May and into June.
Good wishes for the week ahead!