If you catch my drift.
We entered into this same kind of situation on October 29th with the at 70.55 and a non-confirmation by the and I am suggesting that we're about to see the same kind of pull back ranging somewhere between 80-100pts This pull back will take perhaps two to three weeks to complete and will take $SPX into the high 1600's, at minimum. IMHO, of course.
As you can see on the chart, $SPX is still inside the trading range that it's been in for the past two weeks, or so, and while there may be some kind of bounce on Friday, today's high indicates distribution by large players. These large players aren't likely to re-enter the market until they're fairly certain that the dust has settled and that might not be for several weeks.
There really isn't a 'sell' signal for $SPX yet as there have been no crosses of MA's. Some might think that $SPX just came down for a test of the 20MA, which it often does, and now back to the rally. And perhaps I'm wrong in looking for an additional 80pt drop from here, but I don't think so.
All IMHO, and I could be totally wrong.
In my books this comeback has led me to consider a higher high scenario but does not affect daily and weekly charts and the possibility of price correcting soon. Those things takes some time but the play is still the same. Considering this i have two scenarios.
1- Price open flat / gap up and they spike up to 179-180 area (completing ABCD pattern since 2009) and play the long awaited 10 points+ correction we have been waiting for a while, thus making work, as always the divergence seen on the charts today.
2- Price gap down and continue its selling pressure, weekly candle is a hanging man and could trigger the short side if next candle prints under 175..
My only concerns remains the 1816-1820 area being 1.61 projection between 2007 high and 2009 low.
Either way the question is not where but when, i think that latest action is just postponing the inevitable and as soon one of underlining patterns is complete we will have our short side clear, at least for a reload maybe more depending on rapidity and macro. Cheers!
That being said, you could be 100% right and I could be 100% wrong. That's the beauty of the market. You never get to see it out of the front windshield. You only get to see it out the rearview mirror.