Once the resistance area was broken, SPX pushed up and reached the short term target zone. In fact, it was exceeded slightly, and right on time. There is room in the Deja Vu Cycle for a dip and consolidation next. A number of supports rest below.
After some cooling off next, SPX may spike up quite strongly later this month according to this Cycle to complete the sharp rally phase.
While dips may still be possible this upcoming week, the downside target area was practically tested already. That may have been close enough. If so, then dips may only be minor going forward with a relatively sideways market next.
Overall, the sharp rally phase is likely to continue for weeks to come. Testing of the broadening top formation line is coming into striking distance.
Equal timing and price measurements can be estimated with measured moves.
SPX may be at the yellow arrow in the Deja Vu cycle. The red trendline is of critical importance.
Deja Vu Cycle from 2011:
UVXY closed Friday testing the lower channel fork. It may still bounce around, but when it drops below, then another final leg down looks likely soon. It is early, though can start to look at preliminary estimates.
"This has been an historically awful day for precious metals.
Here’s just how grim the selloff in silver was today:
The $6.49, 18% decline to $30.05 an ounce (that’s the September contract) was the worst dollar loss
since January 22, 1980 and the worst percentage loss since April 27, 1987.
It was the second-biggest dollar loss in history and the fifth-largest percentage loss in history.
Silver has tumbled 26% this week."
From the geometry it is clear why SPX bottomed at the price level that it did. This configuration should prove helpful now in defining support and resistance levels.
The surprise rally phase commenced for SPX with strength, and price is nearing the first target area outlined in previous analysis.
A moderate dip to around the pink midfork is likely once the target zone above is tested. SPX may rattle up and down several times to consolidate in the upper half of the pink fork before advancing much.
The symmetrical pattern continues to play out for UVXY. The combination of forks with exact geometry contained price action nicely. Sideways consolidation completed with a failure at multiple resistances. Decline to #2 is anticipated to be underway. It could take several weeks time to fully complete with bounces along the way down.
VIX did not spike last week, and that was an important clue to confirm the surprise rally for SPX.
UVXY symmetry suggests to be prepared for a wild ride in December markets! Once UVXY reaches #4 in the symmetry, then larger cycles come into the picture as will be explained...
"A comparison is being made between the white circles, and the symmetry suggests
there is some downside coming for UVXY to #2."
The orange support from October 29th analysis was reached last week. This is anticipated to be a very strong level of support. Therefore, the gradual decline phase since mid-September should now be complete.
A rally phase is the next step according to the big picture outlook for SPX.
Short term, a bounce to test just above the white trendline may occur shortly. Ultimately the upper boundary of the turquoise broadening top formation may be reached during the big picture rally phase.
So far SPX has had difficulty pushing up through the pink fork resistance last week, and consolidated sideways instead of bouncing much. However, there is support at 1400 which has been holding.
It may, or may not, trade a little lower this week, but there are numerous supports just below in any case.
Overall, the analysis indicates that the gradual decline phase from mid-September should be nearly complete. There are very positive spots in November short term cycles. The market could soon be in a position to spike up surprisingly sharply.
2 hour Chart
This fork has done an excellent job of defining resistance. Fork resistance has been holding so far. Even if it manages to push up here, then there should be heavy resistance just above (around the orange line).
A re-test of near the bottom is likely for UVXY in November.
There will likely be a few sharp bounces along the way, but overall SPX is anticipated to form a gradual decline lower to the green target area. It is estimated that this decline phase takes 3 weeks to complete.
The process should be choppy with another moderate spike up during the first half of November (once the downside target area is reached). The spike may take SPX to a marginal new high for 2012. A final November spike would complete a broadening top formation.
The bigger picture is much more important, and those charts are coming.
UVXY is at midfork resistance and should flatten out for a few days, then drop down again early next week.
SPX may be relatively quiet for the rest of the week, then have a decent bounce early next week.
Careful with these swings! There are currently very fast swings occurring in the VIX as panic and complacency gyrates from one extreme to the other extreme. This is creating high energy movements in UVXY up and down.
These wild whipsaws look like they are about to become wilder rather than calmer. UVXY fell below the $32 level which is a concern, and suggests further downside could be possible.
This could be the case even if it bounces in the morning.
At the same time, this unusual situation appears to be a major bottoming formation process. Even with possible downside to near the area of the green arrow, the short term upside target remains at $43.
SPX plunged once it lost support of the yellow fork. It tested near the midfork yesterday, and has some room in price and time for a bounce into this Friday (tomorrow). Next week SPX looks likely to drop below the midfork and test the white trendline short term target.
UVXY confirmed a breakout. There should be strong support in the $32's, and next week a test of near the turquiose fork at around $38.50 looks likely.
The short term target remains at $43 by or before Oct 10th.
Many leaders have underperformed from the May high, and this is an early warning. RUT is keeping pace, but normally would be expected to outperform during a decent rally phase. Notably, TRAN is already collapsing. The conclusion is that SPX is currently trading in the late stage of a bubble, and the warning is clear for the months ahead.
It is important to recognize that these relationships are more relevant to bigger picture views rather than short term outlooks. Bigger picture charts are coming soon.