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Tuesday, July 31, 2012

The Waiting Game

SPX might be tracing out either a flag or pennant pattern on the 15-min chart.  While either could portend higher prices (2/3 of the time), a flag would definitely mean lower prices first -- probably down into the mid 1370s.

At first blush, the market seems to be respecting the last high of 1380.39 on July 19.  I suppose it makes for a more positive wave structure.

But, I suspect the bigger worry for bulls is the Fib .786 at 1381.50 (in yellow).  This retracement from the 1576 to 666 plunge (Oct 2007 - Mar 2009) was only recently exceeded again; and a real, live bull market shouldn't have any difficulty retaking and defending it. 

...continued on