Perspective on the rally that was? Comments on the SPX including price levels to watch on these charts

As I posted previously, we expected a rally today and the equities markets did not disappoint! As I also was tweeting today with different price levels, the 900 would have been both a target and a resistance level based on several factors, including that it looks like a prior 4th wave level in Elliott Wave terms - it was the area of the high of Monday (and Tuesday) last week. If the SPX is able to get higher and put 912 back into play again, it would be at the upper line of the downtrend channel I marked onto the hourly chart (below). Today already tested the Fibonacci 50% retrace back to 931.98, which is at 900.62 - coincidence? I doubt it! And it's obviously in the neighborhood of numbers we've been working with for some days now (there's even a level around 902/906 that was broke support previously and could still have some play). The Fibonacci .618 retrace back to 931.98 would be at 908.0068 which is normally a classic "wave 2 pullback" level (in this case, thinking it's a pullback upward) ... but, I'm thinking that would be a bit high if it's a wave 2 in an Elliott Wave, third wave. Still, the SPX could manage it while staying within the downtrend channel. Conversely, seeing a reversal print from this 900 test would be more on the bearish side.

PS Update - congrats to all who checked the Option Pain CBOE (Max-Pain) Calculator from OptionPain.com, extra credit and no doubt extra profits from seeing the rally levels possible in SPY and QQQQ (see upper right, data checked end of day). It's interesting this time there's a divergence in the shape of the curves for SPY and QQQQ. Neither one is quite as "V" shaped as we saw a couple of months ago. Price doesn't need to land squarely on the "max pain" level - actually, it doesn't really "need" to land there at all! but normally goes there more likely than not, unless a strong trend takes over. (If we do see a third wave, that's normally a strongly trending pattern, so we'll keep this in mind as well.)

Today was obviously a good day for Meredith Whitney and the banks! and for Andre Gratian, and ChartsEdge, and the methods pointing up for whatever other reasons we've looked at. Those reasons can include the Bradley model as I posted earlier; so fans of the Bradley model cannot have been surprised at all. The Bradley model would indicate this cresting might last for another day or so, but the other methods may indicate otherwise (unless of course that 908 retracement level is sought out by the SPX). I think the Bradley dates can be off by a day or so, for what it's worth. (As I've mentioned, I don't strictly follow Bradley at all, but I like to remain aware of it.)

If you look at the breadth charts I posted at my UBTNB3 blogspot (link's over there at the right side of this page), you'll see that today did little to repair the damage done last week in the market internals. Couple that with the Fibonacci retrace level, and the other factors, and you'll see that today can have been a one-day wonder (and it wasn't even the range we saw to the downside on July 2).

When you look at the daily chart below, you will also see that the SPX moved up from its 200-day moving average, again, and up to short-term moving average resistance. I'll post a "charts roundup" at my UBTNB3 site soon so you can see that a great many indices and sectors made similar movements testing moving averages. As for the almight Goldman Sachs - it tested that $150 level for a third time. So once it reports earnings, it's poised either for a triple-top failure, or a triple-top breakout - in either case, a significant move. So it's never a dull moment in the markets, but as long as we can remain focused on our levels, trendlines, and other methods - and always be in position by the end of the day to enjoy the evening - we should be fine. Enjoy your Monday evening with your family and friends!