This is a brief post before I leave for a long weekend holiday.
Please don't underestimate the buying power of Central Bankers and don't forget that the FED has a mission to accomplish by promoting a bullish equity market during the fourth quarter 2012.
Maybe we will witness the remake of last year intermediate top some time during end of March - middle of April, followed by a meaningful correction during the summer in preparation for a large rally for the US presidential elections.
Therefore this conspiracy idea would fit with the following long term map of SPX:
If this scenario plays out then price could be unfolding a large Double Zig Zag from the October 2011 lows, therefore price would be now tracing the wave (A).
I have marked the area in the range 1406 - 1440 has an obvious potential topping area. If price dos not pause in this resistance layer then there is not any major obstacle until the 1500 area.
Within this potential large wave (A), I have been working with a Zig Zag (ABC), which began on October 4.
Again if this count is correct price is now unfolding the final wave (5) of (C), with the caveat that the wave (4) is a little suspicious, but at the moment I have no other valid options, therefore I stick to this plan.
The 1440, are in addition of being an horizontal resistance it is where we also have the 1 x 1 extension target = 1448.
So we have a potential target and we also know that when the trend line support that connects the wave (2) with the wave (4) is breached then we will have the confirmation that the Zig Zag is completed.
In addition we know that as long as the 200 dsma = 1260 remains below the price the intermediate trend will remain up (don't forget fourth quarter rally).
Short-term price action:
The bright spot within the EWP that price has been unfolding off the March 06 low is that in addition of being a clear impulsive up leg the last wave (5) has a maximum target at 1424.70
Therefore when Mr Market is ready, price can establish the top of this impulsive up leg.
Today we have quarterly OPEX, it is often a "turning window", and then maybe today could be the day.
Below I have the SPX 15 min chart of the 5-wave move with the option that the top will be established today.
But again don't give for granted that price is establishing the intermediate top, remember that price has to breach the Trend Line support (w2-w4) other wise the trend will remain up.
At the moment SPX for the 2 short-term scenarios I will establish as the line in the sand 1374.
In addition to OPEX's reputation of being a "turning window" we have several warnings that are suggesting that price is approaching some kind of a top:
- 2 consecutive days with the entire candlestick above the BB
- TRIN = 0.42
- McClellan Oscillator: Despite yesterday's rally it has dipped back below the zero line signalling a large negative divergence
- CPCE is too low
Ok this is it.
Have a safe OPEX day and enjoy the weekend, I will see you again next Wednesday.