SPY Week of 10-27-14

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SPY             continues to move towards the target price of 197.50 created from the inverse h&s off the bottom two weeks ago. Reaching this target on mon or tues             seems quite likely. Directly above that is the red trend line that extends back to 2012. This line when broken two weeks ago helped to escalate the selling. This trend on a daily closing basis had not been broke at any point since 2012. Several intraday breaks had occurred and this likely increased the volatility around the line two weeks ago as prices dropped below only to close above that day. Then dropped back below again where it ultimately closed below.

Due to the importance for nearly two years, closing back above on a daily basis on the first attempt with s/t overbought conditions seem unlikely. But with the fed set for Wednesday, anything is possible. If a pullback does occur likely targets are 194.60 and then 192.7.

As of now this may be considered a buying opportunity as SPY             has formed what may be a descending broadening wedge bottom. If so a much higher price target of around 210 is likely with a late Dec             timeframe. If so any pullback should stop above the downward sloping trend that broke. Otherwise the pattern is likely invalidated.

One final thought, I will be interested to see how the market handles the red trendline . if it was the primary trend of is market then closing back above on a weekly basis should be difficult. But looking at some longer term trends I believe that that another line is more important. The next two weeks should answer which is correct.
Full view of red trendiness along with what might be the more important trend below it. Weekly basis, SPY bounced right off of it.
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