I believe this scenario can also be consistent with the Nasdaq charts on the very big picture. I've reviewed that chart and will try to finish marking off Fibonacci levels for it to post with more analytics on it, next weekend. For now, the NDX clearly is more bullish and it can swing higher in its corrective pullback up. While the SPX and DJIA may be more weighted down with other sectors, such as financials and transports, that may need further "repair" in their charts for now.
* Intermarket divergences are occurring. Nasdaq made a relatively higher swing high this past week, than did the S&P 500 and Dow Jones Industrial Average. However, even Nasdaq did not go over the January 6 high - yet.
*Last weekend, the longer-term ChartsEdge cycle charts did show the Nasdaq going higher in the following week, i.e. the week that's just now coming up ... but with the SPX not doing likewise. I only feel free to state this now, because that information was under the subscription part of the ChartsEdge service, and their free weekly charts coming out this weekend will cover the upcoming week. Besides, those longer-term cycle charts are subject to change. Since we already did see the Nasdaq exhibit the greater strength at the end of this week, will that be "enough" for the ChartsEdge cycle charts? I don't know yet, will look forward to seeing.
*Divergence also showed up in the banking and transportation sectors, where both punched new lows. A week or so ago, I looked at the transport sector which seems to sport a triangle that would have a triangle target low at 2600. From when I looked at the $TRAN chart a couple days ago, I didn't notice anything that would get in the way of that target low being reached.
*As for banking, I did post up a chart either yesterday or the day before, showing my best effort at the Elliott Wave count going with the daily bars chart. There are two ways to see that. One is from the bottom-picking side - whether or not the pattern completes a final C-wave low (which from the Fibonacci perspective is possible - from the Elliott Wave perspective, the C-wave looks a little "thin" to me but could be enough). The other, and frankly better way to see it from the swing trader's perspective, is to look for confirmation in the form of a classic trend reversal pattern. That means either a 5-wave movement up followed by a 3-wave pullback, with a trigger day upward - which hasn't happened yet. Or, a 1-2-3 trend reversal or "trap door" setup, with nice confirming volumes and a trigger day upward - and it's also too early for one of these. So banking may have reached its low - we'll look for confirmation, and will also address it in detail in a post solely about the banking sector.
*The SPX is above Tony Caldaro's 848 pivot and as he notes, it leaves the door open to the possibility that we finished the large A up, B pullback from the November 2008 lows, and can continue upward in wave C higher above the January 6 levels. **UPDATE NOTE - the technical indicators are tilting to the bullish side, but this is far from "confirmed" even on the daily charts; and it's definitely not confirmed on the weekly charts. For that matter, the raw volumes never looked confirming from the November lows through January, and only started to look a bit better the last two trading days ... so the "bullish" bear market rally is certainly not guaranteed.
* I'm posting my updated daily chart of SPX below, and as noted on it, I'm not going to fill out the alternative Elliott Wave counts unless and until the SPX goes above the January 6 highs ~943 without making a new low. But I can state for now, that potential projections upward include the two levels annoted onto that chart (below), as well as the .382 retrace from 741.02 back up to the October 2007 high ~1576 - namely, approximately 1063 - for the "bear market rally" scenario.
*Both the SPX and the NDX can also be perceived as completing a triangle pullback after an initial A-wave down from the January 6 highs. (Notice, Elliott Wavers, because it looks a lot like a triangle, it's unlike to be a wave 2, thus likely a wave B, implying a C-wave down rather than a downward 3,4,5 movement. A wave 2 cannot be just a triangle, but a B-wave can be just a triangle.) My weekly SPX chart with my hypothetical Elliott Wave count is at the bottom of this post, so you can see how it looks right now.
* UPDATE NOTE - here is my current daily chart of the SPX. If SPX is in a correction (whether a triangle, or some other type of pullback that doesn't lead above the Jan. 6 high ~943) upward with the next big wave to be downward, then downside targets include approximately 760 [based in part on Terry Laundry's T-Theory projection], 640, or even under 600 if the yearly chart wants to complete a classic Elliott Wave flat C-wave (let's see if it breaks 741 and if so, we'll fine-tune the projection).
Also - in the pullback upward scenario that doesn't go above ~943, note that the .618 retrace back up to ~943 is at ~890; so, the SPX can still go a bit higher and remain within this scenario.
*VIX did move under its 20-dsma as Kosta rightly noted at his blogspot (also in the links at right). But it also touched down intraday to my lower channel line that is shallower but is uptrending. So in my little world of VIX channel lines, I cannot rule the SPX as bullish, unless it breaks out of that new "corner" it's in, to the downside. Instead, I view the VIX as being in really the same triangle that seems to exist in the SPX and perhaps the NDX. **UPDATE NOTE - I posted separately this evening, with a fairly in-depth view of the VIX and why I see it as on the edge of pointing which way the equities markets go from here.
As I've said before, if the SPX goes above the January 6 highs then I'll examine the two primary Elliott Wave counts I'm aware of that "fit" such a rally/bullish move. Unless and until that happens, I'm staying with my overall SPX view that I've shown on my weekly chart and will just be looking this weekend to see whether it's more likely than not, that we see the SPX move above that January 6 high.
In the meantime, enjoy your weekend ... browse the site here under the various topic labels if you haven't seen them before (or want to revisit any) ... and check back later for the new weekly set from ChartsEdge, excerpts from Tony Caldaro's weekend update Elliott Wave commentaries, and Andre Gratian's trend and chart analysis on the S&P 500!
Here's my SPX weekly chart, unchanged as to the EW hypothetical and with data through yesterday's close:
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