Another day of weakness for the US equity markets, with even the VIX starting to show some latter day strength. The original primary target of sp'1345 is very likely to be imminently hit. A multi-week bounce then appears likely, but putting in an absolutely critical lower high.
sp'weekly2, rainbow
sp'monthly3, rainbow
Summary
Both of my infamous rainbow charts clearly show a US equity market that is rolling over.
The weekly chart shows a wave'1 down..and I'm guessing it will indeed come to a halt around the 1345/40 area - where the lower bollinger band is. I would look to late June 2011 on the chart, to see the sort of bounce that I am anticipating.
The monthly chart on the sp' is also now sporting a very clear sell signal, the first red candle since Sept'2011, and thus confirming the provisional blue candle warning in October.
Breaking sp'1266
Lets be clear, this new multi-month wave lower is very likely going to exceed the June decline, which was without doubt, a very cruel tease to the bears.
Primary monthly target remains sp'1200/1175. That seems a VERY viable target, and could be hit within weeks.
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To be clear...
I am holding to the original outlook...
1345..then bounce...1400...although I'd keep a very open mind about the 'lower high'.. could be as low as 1380..or as high as 1425.
What I am now completely ruling out is a new index high >1474 by year end. I think we can pretty safely rule that scenario out. All those 'pros' on clown finance TV touting sp'1500s are seemingly going to significantly fail to hit their targets.
Late night bonus chart...
sp'daily4
Special note, don't get fixated on 'when' the red line hits the sp'1200 level. Its going to be a nightmare trying to trade this market in December. Not only is there the fiscal cliff mess that the politicos 'might' be able to kick into 2014 (or beyond), but there is the seasonal upside bias via a 'Santa rally'.
However, considering the monthly cycle charts, I do confidently say that, the next bounce will be one to short, all the way down to the low 1200s.
*frankly, today was deeply frustrating for me. I'm not a happy bear, I've missed out on some much needed short-gains, but oh well, it could have been worse............I could have been long.
Goodnight from London
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Hmm..an update (before this even gets posted)....
Having read around a lot this evening, I've been trying to better ascertain where we are.
The transports count, which I posted the other day, I should have been looking at it more closely today, since the waves in the tranny have been much cleaner than other indexes.
I've a secondary count for the daily, as inspired by coolbizone (via daneric board)...
Sp'daily5g - count'2
This count - which would actually be supported by my own 60min trans, would be suggestive that we've not had the wave'4 bear flag (black count)..yet.
Instead, we are still in a strong wave'3 decline, that will likely get stuck around my primary target of 1345/40 in the next day or so.
This count then assumes a multi-day bounce of probably 30-50pts, before a further wave lower, and terminating around Dec'11.
Such a count would even allow for a Santa rally ! Everyone would be happy with that..right?
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Anyway, I thought I'd best share that, before the next posting at 10am.
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I will look to re-short in the morning, if we can get a bounce of at least 5-7pts, preferably 10, and then seek an exit around 1345/40.
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