S&P IV

First off: thanks to all who have written in to compliment the blog. I greatly appreciate your comments.

On weekends, I like to review the markets I trade and adopt a blank slate when I do the analysis. This process is different to weekdays when I compare price action to my weekend scenarios.

The figures for the analysis below are basis cash.

Figure 1 is the 12-month (yearly trend) of the S&P The market has provided an Upthrust Change in Trend reversal signal. I need to see a close at 1339 or lower on Jan 31st to trigger the signal. For this view, I have assumed that we will not see a breach of the highs at 1471 before Jan 31st.

01-28-2008-12-m.jpg

FIGURE 1 12-M S&P

The 13-week (quarterly trend) needs the Whole Point Count to confirm which means 7 consecutive weekly highs at or below 1370.6 Note that in previous posts I think I wrote 1364 – if I did, that was incorrect. 1370.6 is the correct figure.

01-28-2008-13-w.jpg

FIGURE 2 13-W S&P

Figure 3 is the 18-d (monthly trend). I am looking for a 5-wave structure where wave-5 will be the longest Ray Wave. Since wave-[2] was a simple correction, I’d expect wave-[4] to be complex.

If we have completed wave-[4][A] (i.e. wave A of wave-[4]) on Friday, we can now expect a retracement for wave-[4][B]. If wave-[4] is to form a sideways, horizontal correction, we can expect wave-[B] to be at least 78.6 of wave-[B] and not exceed the Maximum Extension i.e. 1291 to 1250. I’ll worry about the other types of corrections once wave-[B] appears to be forming in earnest.

My ideal target for the end of this correction is around the 1382 to 1386 zone. But I’d like to see the structure of the rally I am calling [A]-[B]-[C] confirm the targets.

01-28-2008-18-d.jpg

FIGURE 3 18-d S&P

So the review has provided no surprises. What about tonight?

Tonight is difficult to call given the volatility of last week and FOMC Wed and Non-Farm Friday. If I were day-trading, I’d have to see the open to make up my mind. Since I am not trading the S&Ps at the moment, I only need consider tonight’s pattern tomorrow.

1 thought on “S&P IV”

  1. May I add:

    Best to stand aside last night.

    The volume was abnormally low and that’s going to continue until the FOMC resolves on short term interest rates on Wednesday.

    The market consensus is a cut of another .50 basis points.

    If so, will the markets move? moot point.

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