Thoughts on a small pullback before SPX moves higher in early August 2012

There appear to be various indications that we could have a small pullback before the stock market moves higher. Such a pullback might last for only one day, so be aware of that. The FOMC is coming up next week, and normally we would also expect the new months, new money effect to produce higher prices in the later part of the week, August 1-3. At this point, be prepared for the possibility of a dip on Monday, and then be alert for whether Thursday, August 2 will be a high or low. A pullback may only retest SPX 1350's to 1360. Be sure to read Tony Caldaro's Objective Elliott Wave weekend update at http://caldaro.wordpress.com/2012/07/28/weekend-update-355/. He mentions the importance of SPX 1344 in case there's an overbought pullback. He also addresses bonds, currencies, commodities, and other countries' indices.

A potential wildcard in all this is that today, July 28, is a Bradley turn date. I'm told that the Bradley turn dates have been having better accuracy this year. Normally, I don't put much stock in them, and even today we cannot be certain whether this is producing a high right now, or will it simply give us a pullback before a further move up. Just something to keep in mind with all else.

One concerning note is that the McClellan Oscillator didn't make a higher high than it did early July, which looks like a non- confirmation so far. It's early yet, so just another reason to consider a pullback. It'll become more concerning if the indices advance higher without higher highs in the oscillator. It's the one chart I wanted to include with this post (other charts I already posted last night via Twitter) but having technical difficulty click on the Twitter pic link to see it: . The Summation Index is also rolling over, which supports the concerns that the longer term might not be so good either. There's a similar point about the VIX, it made a higher low (not a lower low) so that's a bearish divergence. Also there's a short- term trading signal on VIX that bought Thursday and closes out Monday. Again just something to consider for the weeks ahead. It's also noteworthy that the Dow Industrials $DJI $INDU are stronger, while the Nasdaq 100 $NDX and Russell 2000 $RUT are weaker.

Assuming we pullback a day or so, before we move higher, how high? There seem to be various reasons to expect the SPX to rise above 1400 again.** After that, it's a matter of whether this really is a bull market that will carry on to new higher highs, or at least rise above 1500 again. Or, will the market roll over again and retest the June 4 lows about 1260's to 1280, or go even lower. Personally, I think it can go either way. That's why I think it is increasingly important to be flexible, and to pay attention to timing since the timing of a low or high - rather than absolute price - can be the way to decide whether to hold or fold, and when to re-enter.
**NOTE - I just watched and do recommend Chris Ciovacco's charts analysis video at http://ciovaccocapital.com/wordpress/index.php/stock-market-us/bulls-still-in-control/ covering the SPX, equities in general such as other countries and financials, the VIX, internals and breadth, and DeMark indicators status & projections. I'm impressed by the quality and clarity of his analysis; so I highly recommend watching it. Doesn't change my thinking but he does a great job of showing why this market is more bullish than many realize - if support holds!

One cycles source that is proving to be very interesting is the "Change in Trend" blog, and you should take a look at the new post there, at http://changeintrend.wordpress.com/2012/07/28/the-drop-zone/. Their information suggests that August 9 may be a high, and I am also seeing from various cycle methods that August 6-9, and especially August 8 or 9, may be a very significant high.

The week that includes August 8 and 9 is also an important week in terms of the Tom Demark indicators, I've been told. I'm no expert in that method, although I have begun to study up. It is my understanding that, since that will be week 9 after the June 4 low, and so long as the Demark support levels are not violated (seems no problem now), the market will be set up for a "Wave C" down to retest the June 4 lows. So that's something to consider too!

This is all in context of the bigger cycles. It's important to understand that the four-year cycle may or may not have topped out. If it has, then the idea of retesting and moving under the June 4 lows becomes quite serious. Otherwise, if the four-year cycle has not topped out, then we could see higher prices around October to November 2012, and even during the year 2013. I've seen good analyses that would project an important peak either in the spring, or in Jun, or August 2013.

One more note: Terry Laundry passed away earlier this month. His remarkable T Theory - which many appreciated, and others don't agree - often pointed to important tops. He used to provide audio commentary about this at TTheory.com. His last commentary July 7, 2012 described a mega-T that topped mid-2011 and another (40-year vintage) that topped March 2012. He seemed to think that was it, and the market shouldn't produce any new higher highs for a few years. The work will be left to Parker Binion who's carrying forward Terry's work to help determine if there might be any more ancient T's that might produce higher highs, or was the early 2012 peak all that we get before the bear market sets in.

May as well note also that Martin Armstrong has written a new post at his blog, at http://armstrongeconomics.com/2012/07/28/dow-jones-rally/. He doesn't get very specific for free, but mentions both the ideas of a high August or September, along with a possible panic but not clear if that might be during August or more in September, even October.

These are ideas to ponder until we get past mid-August. For now, it's a matter of navigating the next two weeks.

A-Z financial market forecasts for 2012: stocks, gold & silver, currencies, bonds, oil & more

Happy New Year 2012! Here's a review of forecasts across the financial markets, and we'll cover what we and our go-to featured analysts are seeing; as well as a review of other analysts and approaches that we think our readers will appreciate. Browse these now, and bookmark this post to refer back to from time to time. Odds are you'll even find some ideas and approaches that you may want to give more attention to in the future. The chart first at right here is actually from a cycles projection by Jim Curry (back in Feb. 2011 and still very telling for 2012!), and I'll discuss it in more detail later below. My own general views are based on Fibonacci time and price projections as well as my understandings of Elliott Wave and cycles. These have me bracing for stock market weakness in January, a rise (lower high?) into March, lower again in the summer (June-July), and then I'm less certain right now about a potential rally into late 2012. For KI$$ investing, I've just gone long again on gold and silver, so long as they respect last week's lows, and that should last most or all of 2012. Crude oil could turn bullish, but unless it strengthens fast, I'm tilting bearish on it because it could retest not only the $85 area but even down to $62/65. I'm bearish the euro as it could head toward a Fibonacci retrace level around $112 $XEU. The dollar is tricky because I do expect it to strengthen further, despite the efforts to push it lower; but at some point it may destabilize downward (fueling gold most likely); we'll assess that once we see how it reacts after a rally of perhaps 10%. But since my views are informed by also surveying the contributions of others, let's see what these talented analysts have to offer! For some I'll indicate or include their forecasts; others I'll include as resources.

"A" is for Andre Gratian whose Market Turning Points update we're glad to share each weekend. He's been referencing long-term cycle lows the stock market is heading toward bottoming around 2014. I'll post his next update Monday, so check back to get all his current think on stock indices, the dollar, bonds (TLT) and gold (meantime you can see his most recent update posted here on December 26).

"A" is also for Afraid to Trade, a site by Corey Rosenbloom at http://afraidtotrade.com with his blog at http://blog.afraidtotrade.com. This weekend he's showing a very interesting chart analysis of Google (GOOG) at that blog.

"B" is for Mike Burke - he publishes a weekly Technical Report analysis for the US stock market. It's posted at Safe Haven, and if you read it you can also see his info on how to sign up to receive it weekly by email. Not really the only thing I'd use but a good adjunct to weekly preparation.

"B" is also for the Bradley siderograph which produces turn dates. But I'll put it at the bottom as "Z" for Manfred Zimmel who produces a forecast chart (warning, the highs/lows aren't absolute - only consider the strong dates as turns; I've even seen them result in a continuation twist rather than pure turn). Under Zimmel below, you'll also find Manfred's explanation of the Bradley siderograph.

"C" - hey, a three-fer! Tony Caldaro, ChartsEdge, and Jim Curry. We'll take 'em one at a time. Tony Caldaro is the greatest Elliott Wave analyst of our time, in my humble opinion. He's reinvented it and calls it Objective Elliott Wave (certainly distinguishes his detailed work totally from that discredited permabear Robert Prechter of Elliott Wave International). We're honored to feature Tony's updates here on a regular basis. Currently he's depicting the stock market at a serious juncture, which you can read about and see in his update posted here yesterday.

ChartsEdge by Mike Korell produces keen cycles forecasts for different time frames,. Mike developed unique ways to systemetize the forecasts via a neural network incorporating cycles of varying lengths. He also (for subscribers) incorporates pattern recognition and physics (geomagnetics) for daily and weekly charts that work uncannily well. We're pleased to feature his week-ahead cycle-based forecasts each weekend (and I like to use his daily subscriber charts for intraday trading).

Jim Curry does methodical cycles work. Sometimes he shares a free article that we post. Hey, his February 2011 article was a tour de force with chart projections that are still working! (though his subscriber updates will have been targeting the choppy action since summer). The chart at the top of this article is just one of many you'll want to see in "Stock Cycles Looking for a Peak!" posted 2/22/11 at http://cyclewave.homestead.com/stockcycles.html.

"D" is for DecisionPoint by Carl Swenlin. A solid set of chart work that readers may want to look at from time to time.

"D" is also for Tom DeMark; and interestingly you can often get DeMark signals info for US and other stock markets, even other tradable assets, from Kevin Depew via his Twitter @kevindepew and sometimes that and/or other insights from Joshua Demasi tweeting @joshuademasi.

"D" can also be for Daneric's Elliott Waves at http://danericselliottwaves.blogspot.com/. It's his hobby, so not as complete and rigorous as Tony Caldaro of course. But if you enjoy seeing what it's like to work through Elliott Wave analysis and probabilities, you may enjoy looking at it from time to time. Daneric is talking about a bearish wave 2 up scenario, so that implies a substantial stock market drop looming just ahead! Still, I've gotta say we do turn to Tony Caldaro for Elliott Wave projections, addressed below.

"E" is for the Economic Confidence Modeled pioneered by the iconoclastic Martin Armstrong. It's been awhile since we dug up his updates, but now he's out (literally) and about, and prolific. I have the general understanding that June 2011 bottomed Martin Armstrong's 8.6-year business cycle. That doesn't mean the cycle has to make a higher high, even though the early stage of any cycle is bullish. Note that the next low in that cycle will be in early autumn 2019 (interestingly, some project gold to be bullish, with weak stock markets, into 2020). If you want to study Martin Armstrong's work, including his current and new reports, go to Writings | Armstrong Economics at http://armstrongeconomics.com/martin_armstrong_writings/. Some you may find rather interesting are:

Gold and Reversals, 12/27/11, at http://armstrongeconomics.files.wordpress.com/2011/12/armstrongeconomics-answering-questions-gold-reversals-122711.pdf.
Martin Armstrong's December 27, 2011 report at http://armstrongeconomics.files.wordpress.com/2011/12/armstrongeconomics-financial-border-controls-122711.pdf.
Armstrong's interesting discussion and forecasting levels regarding the demands and prospects for gold, the US dollar, and US bonds in these turbulent times - why they're going up (and what'll make the dollar and bonds go down): http://armstrongeconomics.files.wordpress.com/2011/10/armstrongeconomics-30-yr-rates-record-lows-100711.pdf.
Also his 11/4/11 "Financial Armagedon" report with discussion of debt, currencies, and gold as a hedge and investment including a detailed analysis of gold forecasts for the coming months and years: http://armstrongeconomics.files.wordpress.com/2011/11/armstrongeconomics-financial-armagedon-110411.pdf.

"K" is for Samuel Kress, though it could almost be for Kondratiev, because Kress analyzes long-wave cycles (such as 60 and 120 years). His updates are sometimes summarized by Clif Droke in articles at Safe Haven. Clif has stated that the 6-year cycle peaked around October 2011, and suggests that the stock market may not make a new high before the long-wave cycles bottom in the years directly ahead.

"M" is for the incomparable Raymond Merriman whose public weekly previews we're delighted to feature. If you don't already have his Forecast 2012 book, go to MMACycles.com and get it now. There's a wealth of great forecasting for the stock markets, US bonds, currencies, precious metals, crude oil, and grains, plus other bonus features like forecasts for the US presidential elections, the US and the world socionomically for the years ahead, the Federal Reserve, and annual horoscope forecasts for individuals under the various astrological signs. Fascinating stuff.

"M" is also for McClellan - we greatly appreciate using the Oscillator and Summation Index invented by McClellan ... Did you know they have a website? Maybe I won't agree with them 100% but they're doing a lot of great work. Check out their latest "Copper Weakness Is a Warning Sign - Free Weekly Technical Analysis Chart - McClellan Financial" sounding, a warning based on weakness in "Dr. Copper" at http://www.mcoscillator.com/learning_center/weekly_chart/copper_weakness_is_a_warning_sign/. But copper isn't gold - see their post earlier this year, One to Three Years Left For Gold's Run - Free Weekly Technical Analysis Chart - McClellan Financial, at http://www.mcoscillator.com/learning_center/weekly_chart/one_to_three_years_left_for_golds_run/.

Another to consider is Marty Chenard who has a website service and occasionally posts at SafeHaven. His work is good but he isn't very open in public about forecasts for the future.

"M" is definitely also for Mr. Top Step, veteran traders of the ES_F (S&P futures), bonds and more, and if you're seriously trading you'll want to follow those tweets @mrtopstep.

"N" is for the Najarian brothers, Jon and Pete (yes, same as on CNBC's Fast Money, and along with Rick Santelli (also a veteran featured on CNBC many mornings), in the movie Floored). Again, if you're seriously trading, you'll want to keep in touch with their optionMONSTER, and tweets via @optionMONSTER and especially @optionMONSTERfd.

"O" is for the Outlook, that is, the Monday Morning Outlook posted (and can be received by emails) by the excellent Todd Salamone and of course Bernie Schaeffer and increasingly Rocky White at Schaeffer's Investment Research. Todd Salamone helps keep and eye on the technical and sentiment backdrop each weekend, mainly for the US stock markets.

"P" could be for Phil Davis who has his Phil's Stock World website with subscriber services, and occasionally posts at SeekingAlpha. His work is very good, but he focuses almost entirely on heavy-duty options trading, and isn't very open in public about forecasts for the future other than for the immediate future.

"P" will also be for Prieur de Plessis whose "Investment Postcards" updates often contain good alerts and interviews. Such as the next one, below:

"R" goes to the venerable Richard Russell. You'll want to know this: “Upside gold crescendo lies ahead,” says Richard Russell « posted at Prieur de Plessis' Investment Postcards from Cape Town, December 31 at http://www.investmentpostcards.com/2011/12/31/upside-gold-crescendo-lies-ahead-says-richard-russell/. Russell also issued a bearish alert on the stock market recently, indicating he doesn't expect it to make new highs.

"R" can also be for Alex Roslin who creates trading signals for 8 markets (SPX, Nikkei, gold, oil, natural gas and more), at his http://www.cotstimer.blogspot.com, using the weekly Commitments of Traders reports. He's improved his analysis and signals during the four years he's been posting and you'll want to keep an eye on his signals.

"S" we'll assign to Sentimentrader - they produce a neat gauge each day ( which Andre Gratian includes often in his reports). They also have other free and paid services, including a blog and a Twitter (I do follow them on Twitter).

"T" has to go to Terry Laundry with his trademarked "T Theory™" (incorporating breadth/strength analysis) as well as incorporating some cycles has definite opinions regarding the path of the stock market, gold, and US Treasury bonds. Yes, he's talking about a projected low date in January, and has thoughts about price and time both then and as 2012 will progress. Terry also has projections for stocks and gold (and probably bonds) that go out for years ahead. You can hear Terry's free T Theory weekend updates at http://www.ttheory.com/observations.php, which also has a link to his free public charts at Stockcharts.com.

"V" is definitely for VIX and More, analysis by Bill Luby on the volatility index. You can follow his VIX signals and informative discussions at http://vixandmore.blogspot.com, and via Twitter too. Anything you want to know about how the VIX works, "and More", you can learn there.

"Z" is for Manfred Zimmel with his work on the Bradley siderograph, at Zimmel's Amanita Market Forecasting site. Here's a quote of his Bradley chart discussion at http://www.amanita.at/FAQ/FragenzumBradley-Siderograph/Bradley-Siderograph/

The Bradley [astrology-based] siderograph was developed in the 1940'ies by Donald Bradleyto forecast the stock markets (link book). Bradley assigned numerical values to certain planetary constellations for every day, and the sum is the siderograph. It was originally intended to predict the stock markets. The noted technical analyst William Eng singled out the Bradley model as the only 'excellent' Timing Indicator in his book, "Technical Analysis of Stocks, Options, and Futures" (source: Astrikos).

It is crucial to understand what the siderograph is about since many traders (and even financial astrologers) misunderstand it. Over the decades it has been observed that the siderograph can NOT (!!!) reliably predict the direction but only turning points in the financial markets (stocks, bonds, commodities) within a time window of +/- 4 calendar days (in some cases up to +/- 1 week with the exception of Amanita pivots (+/- 1-2 days). Inversions (i.e. a high instead of a low and vice versa) are quite common.

In 2011 the Bradley siderograph could not beat random probabilities by much, when taking all turning points into considerations. Only the major turning points (bold & large in the chart) continue to be valuable timingtools *today*.

2011

2012

This is the Bradley standard model (original formula according to Donald Bradley) from December 2011 through January 2013:

In 2012 there are 4 major turning points:

• March 3, 2012
• June 12, 2012
• July 28, 2012
• December 22, 2012

Strictly speaking the siderograph dates are potential turning dates, bifurcation points in the language of chaos theory. In addition to the standard model there are 3 other models in the premium area, which may be quite different. All Bradley analyses in the free area since 2007 can be found here.

Raw data for your own research

Premium subscribers of Amanita Market Forecasting get the data of the four Bradley models for the period 1990-2020 as a .txt file (click here to subscribe). Another possibility: you calculate the data yourself with the aid of a financial astrology software ('Financial astrology is the use of astrology to analze and forecast the financial markets. Here financial astrology is understood primarily as an empirical-statistical discipline. The probably first financial astrologer in history was Thales of Miletus who is viewed as the father of science and philosophy (together with Aristotle). With the aid of astrology Thales foresaw an excellent olive harvest, so he hired all olive presses that he lent out with a huge profit, which made him a rich man.') - please go to the software-page. I mainly use the Market Trader von Alphee Lavoie, which is too expensive for the average hobby researcher though.

Enjoy the forecasts and educational analysis offered by the above array of great folks - it's enough to last you through 2012 in more ways than one! There certainly are others who do great work, I'm not intending to diss anyone by exclusion. I'm just including those that either we consistently refer to (readers will recognize as such here over time), or that I know my readers will find interesting for their views and/or analysis. I may augment this later this weekend and as the year progresses. Happy New Year all!

"T's" and technicals combine with VIX and sentiment to offer new insights for market analysts

Sentiment has become significantly more bearish as the stock market became oversold again last week. There are several methods to see this including some you probably haven't heard about yet. For starters, Terry Laundry has launched new features at his T Theory™ Observations: Terry Laundry's Weekly T Theory™ Observations - Week of May 21, 2011 at http://www.ttheory.com/. His theory - which he's been applying and refining for decades - is a way to measure breadth and market internals strength, combined with time and Keltner-type channels, to project highs, lows, and probable price levels, in the S&P 500 index, bonds, and gold. You may want to bookmark his new public charts page at Stockcharts.com, and of course you can always find his T Theory™ website right here in the sites list at the right site of the page. If you look at his charts and hear his audio, you'll understand why he's very cautious now, AND projecting a high of significance in June.

Another technical and sentiment resource I like to keep an eye on is the weekly article at Schaeffer's Research (and you can get on their email list to receive the teaser and link). This weekend it's Monday Morning Outlook: Choppy Trading Ahead as Bulls and Bears Battle It Out | Market Observations | Schaeffer's Investment Research. Todd Salamone in particular, and nowadays Rocky White as well, provide solid analysis and predictive outlooks each weekend. I don't know how to sum up their work this weekend, so read it for yourself and see their info on high bearishness (a contrarian bullish signal), a volatility index (VIX) warning, seasonality with Memorial Day approaching, and more.

Let's take a look at my own VIX charts, below. The daily and weekly both show that the spike up last week was within a consolidation range after a larger downtrend since November 2009, and more recently since approximately May 2010, and since March this year. What this means for your trading depends on your time frame; longer-term investors will want to see if it makes a higher high, and moves above the Bollinger Band and moving average resistance. The VIX level and its indicators on these charts show that it's testing resistance. It would be possible for it to move higher, and then (perhaps late this week?) start making a reversal along with stocks starting up again. If we see - perhaps in June - the VIX making a higher low while the stock market makes another high, that would be yet more of a warning sign.

The week ahead does indeed look dicey. There are good indicators pointing either way. For myself, it looks to me like the stock market wants to push higher even though there are possibilities that Thursday (the 26th) will provide the best tradable low. If so, we'll have to see if it's a lower low or higher low. Below is my own $SPX chart. The steeper trendline looks wrong now, and last week's low looks like it touched a line that would parallel the last two swing highs. I'm intrigued by the possibility that we may be seeing an upward parallel-channel diagonal in the making. If last week's low holds, this line could point to another swing high in early June.

The McClellan Oscillator ($NYMO, in lower indicator window on the chart) did end the week resting on an uptrend line I'd marked, after bobbling through it during the week. Maybe it'll "behave" and march upward, giving strength to the stock market in order to position for an early June high to be a higher high. We'll see ... and there's more to present here later today, so we'll see how it all looks.

Sentiment and technical status of the stock market following volatile opex week: it's not over yet

Here's a quick recap of how my favorite sentiment and technical strength indicators look following a volatile opex week! Starting with the volatility index ($VIX), it looks like it's once again testing trendline and Bollinger Band (especially on the weekly) support on both my daily and weekly charts. The weekly chart in particular is interesting, because it shows that VIX has made a higher low within a "triangular" set of trendlines even though the stock market has been testing relatively new highs. That's typically a bearish signal. It doesn't mean that the market is about to crash horribly, but it is a warning that the correction we've seen since last week's crest may not be over yet. Next after that, you'll see my daily and weekly charts of the equity-only put-call ratio ($CPCE). After plumbing the low from which the stock market dropped and the CPCE rose, it's snapped back to somewhat normal levels including a fairly stable moving average level on the weekly chart - this one's less telling than the VIX about next moves, but it can support the notion that the CPCE needs to rise higher (with the stock market moving lower) before it's giving a buy signal.

Check out the McClellan Oscillator chart for the NYSE ($NYMO) - and I also include the Summation Index ($NYSI) in a lower window of that chart. You can see that the Oscillator bounced up from a trendline, coincident with the bounce from the intraday low on Wednesday, and snapped back toward potential resistance in the area of the zero line and trendline re-testing. When you look at the chart, you'll see that the McClellan Oscillator was showing negative divergence for a long time going into the top last week. The next really good buy will display positive divergence. More concerning is the fact that the Summation Index has dropped below its moving average as I've marked (with a red circle) in the lower indicator window. The Summation Index is a longer-term indicator and so this suggests that the correction may have longer to go.

Then at the bottom, there's the TRIN. It's quite interesting that its 10-day moving average is still above 1.2 which means it's technically oversold, but the other moving averages are under that level and so its the TRIN value itself. This is after the TRIN had snapped up from the very overbought conditions of some days ago. Notice that the big "sell" last week was from a higher low in the TRIN - I find this rather common, and it also suggests that a more significant "buy" signal may well come when the TRIN is at a lower high.

All in all, it looks to me as if the market has made a very nice bounce from a very oversold condition, but the volatility is probably not over yet. It's also true that I keep in mind Terry Laundry's T Theory(tm), among other indications, which suggests that the crest last week was potentially very significant with a correction that should last longer than one week. His charts at his T Theory (tm) website (always in the list at right) have been suggesting for quite a while now that a low of some sort should occur later in November or even in December. This overall thinking definitely affects my point of view. So - sure, the market could surprise me to the upside ... but these sentiment and technical charts are indicating to me that the correction actually should not be over yet.

PS - after posting this, I browsed over the COTs Timer blogspot (also in the list at right) and I see that Alex Roslin has posted this today: Selloff May Not be Over. Hey, I didn't coordinate the title of my blog post with him - but clearly he's got the same idea, based on looking at the latest commitments of traders (COT) data! Which of course I think is pretty neat so I'm posting this reference to his blog post.

PPS - for those who like charts, as well as the cycles on Bradley siderograph model - take a look back at my post entitled Stock market possibly cresting before October 25 Bradley model "turn date" window from October. Sure, the topping crest didn't happen then - it actually occurred around the time frame of the more important Bradley turn window Nov. 15-16, also marked by a time series high-low-low-high that I placed on a chart of the $SPX in that post. Again, not a guarantee that the correction must last longer, but adding to the technical evidence that the crest we saw last week going into this turn window may take a longer time period to correct.

Something positive for stock market bears (even bullish bears) with negative divergence

Something happened for the stock market bears yesterday: the major indices reacted poorly to a test of important test levels. In the S&P 500 index ($SPX) that was a projection of Andre Gratian's at 1168 (see his Turning Points update, posted here yesterday), which also is a pivot level of Tony Caldaro (whose Objective Elliott Wave site is now at caldaro.wordpress.com. In the Nasdaq 100 tracking ETF (QQQQ), it was a jump over $49.53 which is the 90% retracement to the April highs. Double top resistance is one way to describe that. Doesn't meant it can't or won't be overcome. But the fast drop in the afternoon gave bears some hope that the recent choppy movements (see the $SPX hourly chart below) might have formed a bearish ending diagonal wedge. If so, it could mark either a "b" wave top, or the end of a first wave up, or the uber-bearish "wave II" scenario that presages a Prechterian "wave III" market crash. All good reasons to turn cautious. The indicators, especially including the StochRSI and McClellan Oscillator, have been displaying negative divergence. So it's the bears' turn to press their advantage. We'll see what they do with it. We do see reasons to think about an effort to regain levels after an overnight drop in the futures, but it's the bears' turn to show if that's merely a backtest before heading lower.

Don't forget there are some bullish viewpoints still. ChartsEdge has projected upward, in an adoption of a possible inversion change from a previous projection downward for this week. Tony Caldaro's primary wave count for the stock market is also bullish. But his alternative is for a "b" wave to top out and give way to a wave "c" down that should retest toward 1010 in the $SPX and maybe even 940's. That alternative is still way more bullish than the Prechterian "wave 3 of III down" market crash idea. Also don't forget other good analysts like Terry Laundry (talking about an early-to-mid-November peak) and Raymond Merriman (talking about a peak next March). What do we conclude?!

Given the negative divergence, and despite the market's very high retest tiward the April highs, I believe it's safer to assume the market will pullback or at least consolidate before another attempt to exceed the April highs. If those April highs are exceeded, then a bullish count becomes the way to go. And that may happen. We didn't get a top and roll downward last week. But the current stock market waves remind me of a certain "flat" b wave that occurred in gold over a year ago, that resulted in a massive zigzag downward "c wave". So even though I've been overly cautious recently, I think my sense of caution was early and not wrong. There's a gap in the QQQQ around $48.60 that may want to be filled, and one lower at $SPX 1105 too. We'll see if the bears can have their turn and what they can do with the market before the low time window probably around October 18 or so.

One trading approach therefore becomes, I'll look for the QQQQ to "trigger" by moving and closing under $49.53. Then I'll be and remain defensive, until either it stops me out by pushing higher again, or makes a good move to support preferable with positive divergence, hopefully right to the October 18 (or 20th? according to @PositionSizing - the "Parker" contributing to fine-tuning Terry Laundry's T Theory(Tm) projections).

Stock market may have scary peak after Halloween and post-election slide down to New Year: Terry Laundry's T Theory(tm) update

The stock market is probably making a near-term crest top to roll down and test $SPX 1105, at least by comparing Terry Laundry's T Theory™ projections with the update of Andre Gratian that I posted earlier ... Plus there's a gap at 1105 that might like to be filled.... But then go into another rally into the second week of November (maybe getting to Andre's 1156 or 1168, unless it tags that already this week) .... Again, I'm just trying to put it all together. You've gotta include Terry Laundry's updates if you're serious about swing trading and/or position trading with technical analysis. Including his Sunday update at his T Theory™ Observations: Terry Laundry's Weekly T Theory™ Observations for September 26 2010 at his main website page, http://www.ttheory.com. And also Terry's Wednesday morning updates, like today's at his T Theory™ Foundation: T Theory™ Daily Updates, Forecasts, Charts and Data webpage at http://www.ttheoryfoundation.org/t-theory-calculations.html. I don't want to give away his great work (and besides, you'll want to know what he's seeing for gold and bonds too). But Terry has put out great updates on Sunday and this morning!

Among his thoughts are a projected top in the second week of November (wonder if that happens to coincide with another Bradley turn date?!), followed by a drop into the end of the year. I was gonna joke about "The Nightmare before Christmas" but it could be a sweet rally into Halloween and early November ... followed by a nightmarish slide right into or through the winter holidays! If it really puts the cap on Terry's big T #13 and ushers in the second phase of bear market, it would even fit the Benner-Fibonacci market cycle that I've described several times in the past year (which targets 2010 as a major high followed by a major low much later).

So let's consider Terry's projections as contributing to the projections we piece together by referencing such talented technicians. They may not always agree with one another, but they tend to converge at important times. Let's navigate the markets accordingly!

ChartsEdge stock market forecast commentary for 9/20

Folks, the stock market forecast commentary from Mike Korell's ChartsEdge is indicated below. First a few comments of my own. The bull-bear debate and tug-of-war has continued since the S&P 500 made that low retesting the 1040 area. I was looking for a bounce then, but honestly was surprised by how high it went for this long. Each day, watching for signs of slackening and reversal, those signs didn't appear, so the rally continued on. Now it's pushing the limits. Soon we may well see one of two things: a minor, corrective pullback before the bull resumes. Or a deeper correction that might surprise to the downside the way this rally surprised to the upside. Once we see a reversal pattern start, we'll go into the mode of watching for signs of either downside continuation, or a turn back up for the bulls. Fans of Terry Laundry's T Theory (Tm) should already have looked and listen to his technical outlook, addressing the stock market and other financial markets (including insights on real estate and gold), using the links at his site http://www.ttheory.com/. There really are some big-picture big debates about what's coming out of the trading range! Later today I'll post Andre Gratian's Turning Points update that discusses his own views, too, with technical analysis and projections.

So for now, let's turn back to what Mike Korell is generously sharing from his public webpage at http://www.chartsedge.com/wp/

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ChartsEdge Forecast Commentary for Sep20

Posted: September 20th, 2010 | Author: Mike Korell |

Filed under:One-Day Market Map | No Comments »

Turning date? or was that just the moon, or asteroids whizzing by the moon, changing the market's focus?!

Will the stock market confirm the bullish scenario, or the bearish scenario? I've been posting up the views of analysts who show both cases including the levels at which one (the bullish case) would confirm -- levels being tested this week obviously. There are some people who view today, Sept. 8, as being a turn date (based on the moon, or Gann, or something). Maybe! Hey, maybe it's even related to this news about two asteroids passing close to the Earth - after all, this stuff is supposed to increase as the Earth passes through the median of the Milky Way in 2012 ...!

Close Call: Two Asteroids Passing Earth Today
ABC News - 09/08/2010
Today is not a good day for the anxious among us. Two small asteroids -- two in twelve hours -- are passing the earth, both coming within the moon's orbit, one of them whipping by about 49000 miles away. [see their picture above right - bigger version is with the article]

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Well I don't have significant theories to present about that, but I will point out a few things. One, as I tweeted earlier today, not only is the market testing Andre Gratian's trendline that he showed and discussed in his Market Turning Points weekend update (which I posted here last night), but it's also on the precipice of a time window in the T Theory (tm) updates of Terry Laundry on Sunday (which I posted here, I believe on Monday or maybe it was Tuesday morning) (and you can see and hear Terry's Wednesday morning update about that this morning, at his T Theory™ Daily Updates, Forecasts, Charts and Data webpage. Also, there are competing "head and shoulders" theories floating around - one's bullish, and one's bearish. I marked both of them on my weekly S&P 500 ($SPX) chart (middle chart below). Well, okay, there's also that one fellow who's talking about a bearish head and shoulders on the yearly charts (McHugh - come to think of it, he may be joined by the Elliott Wave Int'l folks in that viewpoint, too), but we don't need to go there.

From the Fibonacci perspective, I'll say that the height reached on Friday and retested today is around the .618 rebound up from the lows of a couple weeks ago, and I've encircled that on the daily $SPX chart (first chart below). So if anyone wants to count this as a wave two up before a wave 3 down, this Fib level is one to consider ... even if you're not wave counting that way, it's still a significant Fibonacci retracement level. For that matter, on the monthly chart (third chart, at bottom below), the 50% retracement of the entire drop is around the 1120-ish area in the $SPX. I believe this is one of the reasons why there's resistance in the area up by 1120 and we don't even need the index to get up to that number in order for it to be repelled by that Fibonacci resistance. What I'm saying is, that the market shot up to the .618 retrace area on the monthly chart, then dropped back to the .50 retrace, then fell under it when it went down testing 1040 and even 1018. It's popped up again (to that daily chart .618 retrace area), but may not be able to regain the monthly chart's .50 retrace area around 1120-ish. That could be a factor that would bring out the bearish head-and-shoulders scenario and the bearish T in Terry Laundry's T Theory (tm) possibilities.

As for indicators - I've marked them to remind us all to keep an eye on them. Frankly there's enough inconsistency between the daily, weekly and monthly charts that one could argue them either way depending on one's bullish or bearish point of view. We'll let the market levels do the decision-making for us! At this point I am tempted to lead skeptical and defensive, unless the market shows that it really can make a breakout. Maybe I just like the idea that Raymond Merriman talked about in his recent weekly previous about Mercury pulling a fast one! But if the market does show that it can break out from these levels then I'll get on board with it too. Until then ... we'll see!

NOTE - the other analysis I have mentioned - Andre Gratian, Terry Laundry, Raymond Merriman - are among those on the sites list at right (where you'll also find Mike Korell's ChartsEdge which I post regularly too).

T Theory fans - did you eat your apple AND tune in to the weekend SPX update?

If you appreciate Terry Laundry's T Theory™ then I sure hope you looked at his new charts about the S&P 500 index ($SPX) projections, and listened to his audio comments this past weekend! An apple a day keeps the doctor away, and good technical analysis from different points of view keep a trader objective and poised. T Theory™ is a form of technical analysis that uses breadth and volume type measurements to gauge time and (to some extent) price. So why the reminder about Terry's weekend update? He's showing the potential that this market does not float upward from a bullish reverse head & shoulders pattern. Of course the price to beat is now last week's (Friday's) high, so shorts can use that as one type of stop level. Just keep an open mind about the potential of the October low we've considered for a long time now. Below are the links you should see and click on when you visit Terry Laundry's T Theory™ Observations: Terry Laundry's Weekly T Theory™ Observations for September 5 2010 at his http://www.ttheory.com/:

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Todays Observations:

Audio

Download TTOAudio20100905

Chart Download 1995-Pres ADTs20100903pdf

Chart Download SRT20100903vopdf

Chart Download SRT20100903voNewTpdf

S&P 500 likely to test 1040 area in quest for oversold, over-pessimistic bounce

The SPX will reach an ABC zigzag symmetry target around the 1040 level which is also one target of the bearish head and shoulders on it's daily chart below. The TRIN is VERY oversold so expect a snap back once the market is ready to turn. A retest of the 1083-1097 would not be unexpected into the new month, new money time frame - end of August to early September. Sentiment is rather pessimistic and after the lower move today indicated by futures around $SPX 1040, it should get overly pessimistic enough to help support a reaction bounce too.

Be sure to check out similar info from Terry Laundry below - the SPX is testing the lower bands: Terry Laundry's T Theory™ Foundation: T Theory™ Daily Updates, Forecasts, Charts and Data website at http://www.ttheoryfoundation.org/t-theory-calculations.html. Below is a quote of what's there today and Terry's links in the quote go to his website and charts and audio - these are his links.

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For the Wednesday August 25 2010 discussion below just click on the PDF link to open any chart and listen to my Audio commentary by clicking on the audio Download link.

Audio Commentary (click on this link) Download TTFAudio2010082

Chart#1 Download EnvelopeTTheory20100824pdf

Chart#2 Download 1995-Pres ADTs20100824pdf

And below are my own 2 charts plus the SentimenTrader gauge. TRIN shows oversold above 1.2 especially on the 10-dma, and right now ALL the moving averages on my chart are well above 1.2!

Terry Laundry issues technical analysis for the financial markets with his T Theory™ which may surprise you

Near-term the market may kick up bullishly and surprise the bears, then surprise and disappoint the bulls when it rolls over into bear market mode again. Terry Laundry's T Theory™ is a little-known but powerful method to analyze the technical health of market breadth and internals. He issues projections that look like cycles but are really based on those technicals. You'll want to know what he's seeing and saying about the stock market, and also bonds (and gold). Last week he issued a very full set you can still find at his site. This week he hones in on whether the stock market can hold up longer to the end of the month or early September. Below is a quote of how the page looks, and click on his links to go to his analyses at his "Terry Laundry's T Theory™ Observations: Terry Laundry's Weekly T Theory™ Observations for August 22 2010" at his site, http://www.ttheory.com/

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Welcome to Terry Laundry's T Theory™ Observations published each Sunday afternoon. At this site we look at interesting topics that relate to the "bigger picture" investment world as interpreted by my T Theory™ principles. For a more detailed view you should visit my daily short term updates at T Theory Foundation: T Theory Calculations, Daily Updates, Charts and Data. If you are new to T Theory then you might want to read or listen to my T Theory Tutorials at T Theory Foundation. These sites are for the purpose of demonstrating how T Theory can explain market trends since 1966 in a unique way that I believe is superior to the alternatives.

This site is sponsored by my investment company ASIC which has applied T Theory™ to managed accounts since 1978. First time visitors should go to American Shareholders OnLine and read my personal background, our management results using T Theory, and pay particular attention to our proprietary " Best Bond Strategy™ " which we believe is the best path for those of us who are conservative investors.

Audio Commentary: Equity Trends

Audio Download TTOAudio20100822A

Chart Download EnvelopeTTheory 20100820pdf

Chart Download ADTsc20100820

Audio Commentary: Bond Market Message

Download TTOAudio20100822B

Chart

Download Long Term T Bond Performance pdf

Chart Download T Theory Confidence Indicatorpdf