Targets

SPX Daily


Assuming the SPX can get back over the 200 day MA, here are some potential targets.

1130 is a 50% retrace and would be in the vicinity of the 50 MA.

1150 would make a nice head and shoulders, and is a ~61.8% retracement.

1220 would be a double top.

Anything higher would likely create significant negative divergences, and while the rest of the world would be massively bullish, we'll be doing the smart thing and selling into the strength. New highs would only help to enforce the expanding (bearish) megaphone pattern currently on the weekly and monthly charts.

Weekly SPX


First things first though, we really need to get above the 200 day MA sooner than later...Bad things can happen below the 200MA. Fortunately, Friday's rally took both the Nasdaq and Russell back above the 200. SPX should follow?

That worked well

Cautiously bullish.

Now that the CCI triggered a buy signal, we'll be looking for a potential exit. The 13/34 trend lines are solidly bearish, meaning we have to be careful. If you look at the chart provided, this is setting up almost identically to February. Even the CCI is almost an exact match. The only problem is that this time, the 200 day MA didn't act as support for the S&P and we are currently below it. That's a problem. However, on the bright side, the leaders - Nasdaq, Russells, Transport, and Bank Index - are ALL above the 200 day. Because of this, I am bullish and feel we have made a short term bottom.

I will be looking to exit my position either at the 34 EMA line (currently up near 1140) or perhaps when the CCI breaks south of the upward trend line. If we see lots of strength in early June, which is what I'm expecting, I may hold on to my position until we see some divergences set up on the CCI (higher SPX values, lower CCI's) like we saw in April on the chart below. At that point, we'll probably see another bearish megaphone pattern, but now I'm getting too far ahead. If you missed the buy signal, it's definitely not too late to get out of the G fund and into stocks. We'll see another short covering rally of some sort shortly. All it's going to take is one good piece of news.

Going into C fund.

Comp-Q and S&P are having a CCI breakout today, which is a buy signal.

I think the anticipated short squeeze rally should take us to SnP 1130 to 1160 before we think about selling. Of course, there is also a slight chance we could revisit 1040. Choose your IFT percentage carefully. I'm going 100% C. :)

No buy signal yet... (May 19, 2010)

I'm still in the G fund waiting for an indication that it's safe to go back to stocks. I suspect the buy signal will come in the form of a CCI breakout above the declining trend line. This isn't always reliable, but most times it is, and we are playing the percentages here.

Latest Thinking.. May 08 2010

The warning signs were all flashing. Bearish CCI Divergence - check. Expanding Megaphone Pattern - check. Erratic intraday trading with a loss of liquidity - check. The chart below has some useful information.

Now the focus shifts to looking for a bottom. Here are my thoughts. First off, I fully believe we'll see new recovery highs, or at the very least, a double top. There was too much strength before the crash, with New Highs vs. New Lows being very bullish. With that said, going long right now wouldn't be a terrible thing, but I think there is a better price to be had.

I will be looking for any of the following things to happen before going 100% S in my TSP.

1) A lower low on the SPX with a higher CCI value. This is strong bullish divergence... (See Early February.)

2) 2 consecutive green candles above the lower bollinger band.

3) A bounce off the cyan line which connects all the way back to the 2007 and 2008 peaks. Look how we bounced off back in February.

Bearish Megaphone patterns abound...

First up, check out the short term expanding diagonal in SPY.


Also, here's a longer term megaphone in the works (thanks Jim). Target for NYSE looks to be 6500-6600.

Courtesy Stocktiming.com

As for the TSP, I'm looking for a convincing bounce off the 34EMA before jumping head first into the S fund. It could happen this week. I'll keep this site updated with the latest developments and my thinking.