With the market swinging from sp'1882 on Tuesday, to the Friday close of 1841, the bears have achieved an important provisional warning on the weekly index cycles. The blue candle on the 'rainbow' chart should not be dismissed lightly. Bulls...beware!
The obvious question is...was the high last Friday (monthly jobs data) of sp'1883, a key multi-month high? Even if it was, we will need a number of things to occur to be sure of an intermediate top, not least of which is breaking the Feb' low of 1737. That of course is a long way down, and sure won't be easy.
What is clear, any break <1700, will unquestionably confirm that an intermediate cycle high has occurred.
One bearish scenario...
The following is one of a number of scenarios I will be keeping in mind across the coming few weeks and months. Certainly, I hold to a broader downside target of 1625/1575.
It was an interesting week, I have high hopes next week will be not only more entertaining (although surpassing the PLUG hysteria won't be easy), but also very profitable for those bears that haven't yet been ground into dust since Oct'2011.
Goodnight from London
*the weekend update will be on the US weekly indexes