Here is the math:
1219.80 April 26, 2010 high - 666.79 March 6, 2009 low = 553.01 $SPX points
553.01 points X .618 Fibonacci = 341.76 points
1010.91 July 1, 2010 low + 341.76 points = 1352.67 Target
The Fibonacci's also indicate the same target calculated another way:
1332.28 March 3, 2011 high - 1294.26 Feb 24, 2011 low = 38.02 $SPX points
38.02 points X 1.618 Fibonacci = 61.51 points
1291.99 March 11, 2010 low + 61.51 points = 1353.50 Target
Both calculations indicate a top target for $SPX ~ 1352.
There is nicely balanced symmetry on both sides of the cycle line.
30min Chart
Financials are stronger with a higher low (near double bottom) contrasting $SPX with a lower low versus Feb 24th low. The stronger Financials are also confirming a move higher in the short term. The same is true of Small Caps $RUT with a higher low as well.
The short term charts and cycles are very bullish indicating a spike move up (do not forget that the bigger picture is extremely bearish!).
15min Chart
Thanks for the great analysis. What would be a catalyst for this move to 1352 area? As Doug Kass put it, a QE disguised as the earthquake? Or a sharp drop in oil price?
ReplyDeleteActually, could you take a look at crude? Other commodities responded + to the quake but crude, very interesting. A chart would be wonderful. Thanks again!
Thanks. Much of my work is based on cycles and patterns so there doesn't necessarily need to be any specific catalysts.
ReplyDeleteAs always, the media will come up with a reason why it is happening. Perhaps settling in the Middle East or even just plain "economic recovery". The reality is that the economy and markets are in serious trouble.
Crude has been inversely correlated with the markets since Libya. I think that may be about to change. $WTIC may be very near a short term bottom (early this week). So I think crude may actually rise now with the markets. A possible next target is $119. The media will probably say this is evidence of economic recovery.
There is talk of crude jumping to $150 - $225. I don't see this happening. Crude probably tops in April, and I'm very bearish on crude from that point.
Thank you for your kind and detailed response!
ReplyDeleteIt will be interestng to see if today's 1286 bottom holds. One of my targets stays the same at 1352, and the other comes down to 1348 if the bottom holds. Both are still close.
ReplyDeleteThe Japan news was horrible over the weekend. This does affect things on a daily basis, but the overall cycle patterns should trump news events with time.
The markets left reality behind a long time ago.
Got my 1282-1287ish today. That may be the bottom or one more move down after wed of this week.
ReplyDeleteThat was probably it for the bottom today. Financials have been performing much better than SPX since March 7th.
ReplyDeleteI had drawn a more optimistic route for today with a higher low on the SPX chart above at 1297. Instead, we saw a lower low at 1286.
ReplyDeleteIn terms of the symmetry, that means a meltup is next with few dips. I think the surprise will be on the upside.
Futures Tanking.
ReplyDeleteYes, Nikkei crashed. There will be further selling now in SPX in coming days as a result. However, I don't see SPX crashing here.
ReplyDeleteAfter the market finds a bottom likely over the next week, then I still think there will be a strong surge up.
I'll have some new charts tomorrow.