$SPX Daily 02/08/2014

SP:SPX   S&P 500 Index
309 4 2
We had a climax sell signal on Monday, the 3rd, with $NYUD:$NYUPV dropping to -18.43, one of the lowest oversold readings for this that I remember. Then on Wednesday we had a bottoming tail/hammer and the rest is history.

We since have added 56pts to the $SPX             and closed for two days back inside the one-year trend channel. We have also cleared the previous support/resistance area of 1770. However, we are still in a confirmed A-B-C down, though not by much. The C point of that A-B-C down is the swing high of 1798.77 and that shouldn't be too hard to take out and in doing so this will negate the A-B-C down.

The width of the price channel is 120pts, with the bottom being right at 1760. This gives us a measured move to approximately 1880 or maybe 1900 depending on whether we go the direct route or via the scenic route. This move will likely take several weeks but it is possible that we could get to the upper channel line by the end of the month.

This is a pretty optimistic view because we are not out of the woods. First, we need to stay above the previous support line at 1770. Next, we need to get back above the 50MA, and finally, per my method, we need to see the 9EMA cross up through the 20MA as a fresh 'buy' sig . Along with this, I want to see the DI lines have a bullish cross sometime early next week and I want to see the RSI continue to rise. As long as all of this happens in the next week, then we should be good to go. However, we have to hold 1770 or game over.

And don't forget, we have that huge resistance zone from 1810 to 1850 to get through. There are a lot of people trapped up there. As long as the market looks strong when we enter that zone, assuming we do, then those long will breathe a sigh of relief and sit tight; however, should the markets run into a headwind in that resistance area then longs who have been holding may want to go to cash just to be safe and their selling will beget further selling and stronger resistance.

As I mentioned on my 60min SPY             chart on Friday, we are very overbought short term and market will need a bit of time to catch its breath before the next leg up can start. I would guess that first we'll take out the pycho round number of 1800 before we get a pause day so look for a $SPX             close on Monday somewhere just north of 1800 and then a rest day for Tuesday. This is, of course, 100% certified pure speculation as the market loves to make fools of those that dare to divine             its movements and news events over the weekend could throw a monkey wrench into the works.

All IMHO             & GL in the week ahead.
Chart Attached.

Curtis - I had to recreate my chart using TradingView tool and I just published it.
Curtis - When I look at the 5 year trend as compared to the SPX 1 year trend it becomes obvious if the 1 year trend continues as I expect, there will be a break to the upside in the 5 year trend near 1900. As I have said before, there was a 22% decline in 2011 that could (and possibly should) be considered a bear market. That would make be rethink (very reluctantly) that the 5 year trend is obsolete and the trend should begin from the 2011 lows.

That approach also indicates that while the December rally broke the 5 year trend, it bounced off the 2 1/4 year trend since the new bull market. It does not represent a large trend change, but it is very significant in that it better aligns and explains what has been happening since 2001 lows.

I am very cautious about changing trend lines in mid-stream, but I think it may be warranted. What do you think?
CurtisM SimGlenn
Glenn, I've added those new channels to my 5-year chart and they look good. I think the idea is that the trajectory of $SPX is up and has been up for a number of years so both channels seem appropriate to me. After all, this isn't rocket science and anyone into TA must be flexible. Also, if you get a chance, please publish that chart so I can really see how you've put it together.

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