sp'daily5
sp'weekly
Summary
I've updated the daily chart, the clear issue now is whether we can break back above the recent 1448 high, or put in a slightly lower high.
The ultimate line in the sand is the mid-Sept' QE high of sp'1474, although it has to be noted, don't get too fixated on the SP'500. Some of the other indexes - such as the Rus'2000 and the Transports are very much closer to very important thresholds.
It won't take much more upside for some VERY strong bullish signals to be triggered this week.
A look back to some drama
I always like to look back at some of the more dramatic market cycles, not least the periodic collapse waves. Unquestionably, the July/August 2011 down cycle was a big one, falling from 1356 to 1101 in just 23 trading days.
sp' July/Aug' 2011 - a historical perspective
I think the key point of note here is how the wave'3 (blue) unfolded. Notice how black'2 came VERY close to taking out the wave'2 bounce (blue)...but was 9pts shy.
Unique...but similar in style.
Lets be clear, EVERY market day, week, month, and all the time cycles are unique. Many of them certainly have the same kind of style though, so it has to be asked...are we currently seeing a major multi-month decline still underway?
As the daily chart highlights, the 1448 level will be key. Should we take off 9pts - like July 2011, giving us 1339/40, as the next target lower high?
Look at the MACD (blue bar histogram) on the daily chart, how about a fourth tiny tower? If we see a rollover <1448, with a fourth consecutive smaller tower, I have to say..I'll be somewhat pleased.
The July/August chart is also a good example, in that with most major down waves - it usually takes some days to really get going, and it wasn't until day'10 that we saw the first massive move of sp -60pts.
So, even if we max out for instance this Friday, it could easily take two full trading weeks until we see any real drama.
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Bonus chart!
USD, monthly2, rainbow
Those bears hoping the dollar would help keep pressure on the equity/commodity markets should be disappointed with the monthly/yearly close in the 79s. Its not exactly a disaster..yet, but it certainly is not bullish $. The rainbow chart is flashing an outright red warning candle, and if we see a move into the 78s, then I would have to believe the up trend from spring 2011 is indeed over.
The fact that the Fed is due to start 45bn of T-bond buying this week is something that every trader should keep in mind. If that money somehow funnels its way from the primary dealers, and straight into the market..then we'll surely break >sp'1500 soon enough..and just keep going.
Busy Wednesday-Friday
The next few days will see quite a bit of econ-data, certainly enough to give Mr Market something to churn over. We have the big jobs data on Friday, although I'm more interested in factory orders and the ISM data - also due on Friday.
So, lets see if we have a few more days, moving a little closer to 1448, but not taking it out.
I'll keep that 'fourth tower' in mind into next week, it could be very important if we rollover before breaking a new high.
back on Wednesday