The SPX hit my target (1292) on Friday.
After being bullish since December 1st when the SPX rallied above 1200 I'm now flat again ready to buy some shorts if and only if we get some weakness i.e. a decline below the 1278ish and the 1260ish area.
So far no damage has been done to the uptrend though, so it remains intact. If you have a look at the rally since December you can see that we always got the same pattern: rally to new highs - sideways/correction retesting the last high - rally to new highs. So even if we're not near a top we should still see a retest of the 1278ish area. Should this level break though it may be a first sign that an intermediate top is in. Once the SPX declines below 1260ish wave (2) is underway imo.
Before we decline below the mentioned levels I expect some sideways movement for about a week. The last few tops showed all the same pattern: rally - sideways for about one week - sell off:
So, should the market be near a top we may go sideways all week long between ~ 1290 and ~ 1300.
A common second wave retracement is about 50-62 % of wave 1. I don't think we'll retrace that much though.
The March 09 rally (wave (1)) measured 289 points and the following second wave (wave (2)) retraced 30 % in price and 28 % in time.
Today, wave (1) measures 282 points so far (289 at 1300), the 30 % retracement is at 1210ish and the 28 % retracement in mid March. The 1210 target is right in my preferred target area for wave (2) (see this post):
1200 +/- 20 points:
- weekly MA 76 & 200
- 30 % retracement
- wave 4 territory
- 23 & 38 % retracement
- April 2010 top
So let's see if it's even possible to get a correction bigger than 1 %. ; )
Have a very nice week!
