The future is here: now that markets have accelerated to levels we'd been considering, do they have the momentum for more?

It's been a remarkable week, after the S&P 500 (SPX) did the game-changing even of going above 912! They reached levels that we've been considering and annotating onto charts for a long time, and they did it like an express train not stopping to let many passengers on. We've been talking about SPX 961/963 for a while - but, what were we going to do when we got there?! The future is now! The market's like a dog that chases a car's bumper - what's it going to do if it gets there?!

The momentum has the daily SPX chart pushing up its upper Bollinger Band, after rising above its midline on the breakout over 912. So a big question to address this weekend will be, can the momentum continue? I've also included Tony Caldaro's hourly chart from his Elliott Wave Lives On site (thanks again, Tony!), below; you can see the momentum wearing out in the past couple of days on the short-term basis.

If this was a 5-wave movement up from 869 then perhaps, even if it just goes into a moderate pullback. While I wasn't prepared to address the Elliott Wave count - and relying on Tony Caldaro's Objective Elliott Wave for those counting ideas - I've been working through my own thoughts but not quite ready for prime time. Meantime, I've already posted comments here with congrats to Andre Gratian who was recommending setting aside the head-and-shoulders idea even while the "right shoulder" seemed to be in progress (therefore even before it broke above 912). Andre had made those comments in his weekend updates which we post here. I'm only sorry I didn't personally pound the table hard for Andre's ideas on that, instead of simply noting his side in the differences of opinion among analysts.

There was also Terry Laundry with his T Theory, and I had pointed out Terry's thoughts also of a bullish "T" - so congrats to Terry too. I do remain somewhat skeptical personally of his idea that this bear market rally continues for, I think it's another year - but that doesn't mean that we won't continue to point out and cross reference to his work and what he's saying.

For myself, the Fibonacci levels are key, along with the technical indicators of course. Interestingly the Nasdaq Composite met an important Fib projection I had been mentioning here for a while, at 1912, on Wednesday; and it was relatively weaker today, compared with the SPX which met its 961/963 level just yesterday, and the Dow Industrials which tagged their January high just yesterday (thereby implicating a Dow Theory level). There are higher Fibonacci levels to consider, including 990, 1014, 1053 and 1067. There's even 1121, which would be a 50% retracement of the entire drop down from 1576 in the SPX.

One striking fact on the weekly chart is that the volumes were good these past two weeks, including by comparison with the lighter-volume drop from the June highs, and (to a lesser extent) the high volumes on the rise from 667. Yet with all of this movement, the indicators on the monthly chart still have not gotten to the point where they were in 2003 when the markets finally got into bullish gear. That alone doesn't guarantee that it can't happen, but it's a sobering reminder that we don't have technical confirmation for a very bullish move.

I'd felt it was bearish to see a combination of the Nasdaq Composite testing 1912 with the VIX dropping into a low under my long-term Fibonacci retracement for the volatility index. And I still feel that way now that the SPX has gotten to that 961/963 level. Does this mean that I'm advocating a bearish stance? Well .... that's the difference between analysis, and trading. Analysis shows when and where to think more bullish, where to think more bearish, and where to look for a turning point. Trading shows when and where to take an action with reference to skills like looking for a trigger bar, checking indicators like TRIN, bid/ask differentials, performance against volume-weighted average price (VWAP), and so forth.

So for example, when we tracked UNG (the natural gas ETF) to its measured-move target at $12.00 and it got there, I still tried to remind readers to look for the trading trigger. Now for the S&P 500 and Nasdaq, I know many are trying to figure out where to sell this market, and I'm trying to figure that out too! My analysis points to these levels (and the Elliott Wave count when I can puzzle it out), and looks to the surrounding indicators to get a sense of what's most likely. My blogspot is more about these analyses and not so much about trading skills as such ... but I do try to include some reminders about those things. Given my thought of a bearish combination of the SPX and Nasdaq Composite at key levels that can be turning points, juxtaposed with the VIX (and perhaps the dollar) doing the same, the next step is to see whether we get a trigger, coupled with trading-based technical confirmation, and then if we enter, to do so with a protective stop in order to stop out if wrong.

Since we have not yet seen price close under the low of a prior day since the breakout above 912, there's been no reason for a swing trader to sell because there's been no trade trigger. We'll have to wait until next week to see if a trigger shows up. With the levels and indicators I've mentioned, I can see it as being plausible, even if not a lock. Of course, that also means that once again, we've got fodder for some interesting analyses and reviews of the markets. So I'll "see you later" with those, and meantime, enjoy your evening with your family and friends!