Friday, May 8, 2009
DISCLAIMER: This is one of the "what if" charts where my brain is churning wave patterns and I feel I have to spit them out on a chart.
(The market always likes to fool the most people it can at any one time. I am usually one of them.)
There exists 2 very distinct near term targets for the bulls. 1) Closing that massive January gap down at 927-934 2) The 200 DMA for the SPX (and DOW) currently at 954. I am counting on that gap to be closed early this week. The 200DMA depends on how Monday goes.
If the waves push up weak on Monday on yet another ending diagonal type move and make "C" wave high point at say 937, and start to do a bearish retrace, what I *expect* is that the market will drop and at some point support will kick in (either at 910, 897 support, 888 or 875 support - you get the idea) and then the market will turn up again and head for the (now even lower) 200 DMA spot.
So this chart shows a scenario where the 200DMA is hit but not at the C wave peak. The main point I am trying to make is this: Look for a touch of the 200DMA one way or another before May is out or early June. If it did not hit it, THAT would definately be a downside surprise.
Posted by Daneric at 7:16 PM