Game changed in the S&P 500 as bearish H&S evaporated - what's the new game?

Many equities analysts were on to the idea that the S&P 500 going above 912 would be significant, and I referred to it as a "game-changer." So the question becomes, what's the new game? So many eyes were on the bearish head-and-shoulders pattern, and now will be re-evaluating. Tony Caldaro in his update this evening is suggesting that we may be into his alternative Objective Elliott Wave count (see site in links list at right). Andre Gratian had made his comments for the potential in his weekend update (posted here, see labels list at right), and has been sending his updates about all this to his subscribers (hat's off to you, Andre!). Well, I think Andy Askey may have been considering something like this; and of course, Terry Laundry has been looking for more upward movement as well. For myself, I cannot say that I expected a game-changing event to occur, but I can continue to size this up as I see it, and point out that how one responds is as always, a function of one's time frame and trading style. So ... what's the new game? Two places to look for that are Andre's projections, and for those not subscribers I need to refer you to his weekend update (use the labels list at right to locate that). And also, Tony Caldaro's update comments these evening which refer to his alternative count, which he's been showing in the DJIA chart for a long time. Namely, that there's another rally leg higher to go, which may take the S&P 500 to perhaps 1050/1100 (working off my memory right now but you get the idea, above the 1000 level).

I've been mulling over the Elliott Wave possibilities also, because I'm not really satisfied with how the SPX's movements really count out for that alternative count (perhaps Tony has reservations too, I don't know, but I get the impression he isn't necessarily 100% switching over to the "Major C" up idea just yet). In my charts review, I'm including two additional SPX charts below, a weekly and a monthly chart, partly for review of the indicators, and partly to show the Fibonacci levels which include that level at 961/963 that may relate to Tony's pivot at 961. For the time being, I'm leaning on Tony for Elliott Wave counts.

I tweeted quite a bit today, maybe a little much, but a lot of it was about the VIX which I show at right and comment on below. I also tweeted about UNG, and a reader asked if I view today's action there as a bearish engulfing bar. At this point it has that potential, and encroached on that gap so possibly jeopardizing an idea of an island reversal (which of course can never be confirmed without going out in time). As I've pointed out repeatedly, there can be no bullish confirmation for UNG without buying volumes showing up. That still did not look to be showing up for UNG. Volumes started to look better this afternoon, but remained tentative. So yes, as I've also repeatedly said, although max pain suggests $13 or $14 for UNG, and it would be a return trip to the triangle apex at $14 ... without volumes confirming a reversal pattern in UNG, we cannot be certain that it doesn't decline further such as $10.50 or $11.00. There's reason to think $12 can have done it but no guarantee without those volumes showing up - that's just the way it goes when trying to pick a bottom, or a top for that matter!

For myself as one who follows the VIX as closely as I can, I noted what many other analysts noted today - that the VIX poked a new low and then rose throughout the rest of the day as the equities markets continued rising. What I've got that seems unique, is the .786 Fibonacci retracement level back to the February 2007 lows - yes, you read that right - which is at 24.78 (or 24.80 if you round it, and maybe the VIX didn't want to round it!). Today having tested underneath 24.78 and moved back above it, I would expect the VIX to be ready for a reversal upward. Certainly, if the VIX hangs in this neighborhood and "resonates" 24.78 as it did previously around my other Fibonacci retracement level of 33.81, then that would get me on board with the equities markets doing Tony's alternative OEW count of a Major C wave upward yet to come along, or another relatively bullish scenario as Andre is describing and I'm sure will discuss more in his next weekend update.

I did have a Fibonacci retracement in the SPX at 961/963 so if the SPX moves to a new rally high then I would be watching it for reaction there. Along with the Nasdaq where I've got a Fibonacci level at 1912 that can be similarly significant. I've included below the McClellan charts for NYSE and Nasdaq, which are courtesy of DecisionPoint.com (via Stockcharts.com) - and I've placed most of my usual markings on them, including that gap area in Nasdaq which can also relate to the 1912 level I've mentioned. The McClellan Oscillator broke above the declining trendline I've been marking (marking off what was looking like a triangle or wedge in the Oscillator), and it's possible this breakout may assist the indices in moving higher from here. The Summation Index moved up as well, although interestingly for the Nasdaq it's curling back up to the zero line and will have to move above zero in order to look bullish for the longer term.

Among sectors, the one that looks very strong is the semiconductors, naturally because of Intel. Below (under the SPX chart) I've posted a daily chart view of $SOX that just has indicators, and my monthly $SOX chart that has the trendlines I had marked off for this index. These trendlines cannot be real exact on this monthly chart but this clearly is a significant area in terms of trendlines and moving averages. If this index can clear this area to the upside, which the daily chart hasn't done but suggest may be possible, that will be a real positive for the bullish case generally of course.

The dollar has obviously been weak, also the yen, with the euro strong along with equities. There again, these have not moved to new extremes. If I saw the dollar losing support and the euro pushing above resistance (and probably the yen dropping back to and under its 200-day moving average), then these would be signs supporting the bullish equities view too of course. Bonds also fell today, with gold moving higher, and ditto on the point whether these are pullbacks or moving with trend.

That's also the obvious point to make about the broad equities indices and even sectors, of course - there's the likelihood that the strength today in particular will carry them to new rally highs, even though it hasn't happened yet so it leaves us reading the indicators and wave movements. I could also mention the Bradley model chart again (as well as the VIX, or max pain, or even Dow Theory), but does anyone really want to hear about that again?! LOL - almost makes me feel silly for stating the obvious, it's only a breakout if it actually breaks out - in any event, will see!