Friday, November 2, 2012

SPX Update: Intermediate Low in Place?

In Wednesday's update, I noted that the market had likely put in a bottom at 1403 SPX, and I suggested a rally would begin to unfold.  I also published a short-term rally target of 1430-1432 for the S&P 500 (SPX), and on Thursday, the market came within 1.65 of my target. The bulls have taken the first steps toward validating an intermediate bottom, but there is still some work to do before we can declare the bears out-of-the-running.

My work suggests that an intermediate low is in place, and the market is now headed toward the (first) intermediate target of 1480-1490, but any trade beneath 1403 would invalidate that outlook.  The first step for bulls to gain confidence is to overlap the key 1430.64 price point.  Conversely, over the short-term, sustained trade beneath 1416 could suggest problems for the bull case.

The hourly chart notes the alternate potential of a 2nd wave rally, though I'm only giving that potential 30% odds at the moment.  I'll note the key downside levels going forward.

The 5-minute chart anticipated the rally perfectly, and Friday's market looks destined to hit the 1st-tier 1430-1432 target which was published on Wednesday -- when my blue target box looked a lot more lonely than it does now.  Considerably more upside is possible, and if the high-degree preferred wave count is correct, the market is on its way to 1480-1490 at the minimum. (continued, next page)

Finally, a quick update on the Philadelphia Bank Index (BKX), which negated the triangle count I published, but held onto all the key overlap levels the bulls needed to hold.  This market also appears likely to have put in an intermediate bottom.

In conclusion, the bulls still have work to do to validate these projections, but the odds currently favor the view that the low is in, and the intermediate trend is changing back to upwards.  As the move unfolds, I'll continue to note the key levels which would indicate trouble for the bull case.  Trade safe.

No comments:

Post a Comment