In my August 19th update I stated:

"Looks like we now have the last finishing touches of an impulse leg from either the Aug 10th or 11th low. Along with that I have a SPX-VIX sell signal into the close and we are up against a lot of resistance as seen in the chart below. Combine the three, and we have the ingredients for a healthy consolidation/pullback into the next week. Besides, this leg seems to be ahead of itself timewise. After that pullback, I expect to see additional gains as the SPX and Dow try to make a new high for the year. We will be monitoring that pullback very carefully, as we want to make sure that we didn't just finish an extended ABC up to Friday's high."

Below is the updated SPX chart that shows how we did indeed consolidate the following week after finding resistance at that midline of a 2-year-old fork. The market then went to test my Fib support at 1290.50 twice, before making this weeks advance. As many traders were shorting into yet another trap, our members had no trouble getting long once the SPX made that double bottom on 1290.50!

Finding support at that Fib level caused the SPX to slowly grind up into Friday's high taking out the midline off the fork, the .786 retrace level, and also the weekly parallels we have been watching since the start of the year.

We now have resistance above us at a 1317 Fib level. If we take that out, the 1360 level will look very realistic! Until we do take out 1317, I'm a bit cautious since many things that we monitor are finally flashing caution. We also need to watch the possible repeat of the 2000 top, where it made a high in March and then a lower high the day after Labor Day.

The easiest thing for the market to do next week is to rally, and then fail, putting in a reversal day. Even then, you need to make sure it's not another pullback within the rally from June. A turn next week, that finds support into my CIT date of September 22nd, might just set up that last blast. If not, you might be seeing a top next week. Sentiment readings still argue that a final top isn't in yet.

The next chart is an update of the OEX that caused me to turn bullish several weeks ago. On Friday, this market reached the lower band of our resistance at 605/615. You can also see that the RSI has now reached its trendline resistance as well, but is not diverged within this move. I'm sure this market will also find resistance next week, but the RSI could also be hinting that another high might be ahead of us.

The bottom line is, this is where the market will make a decision to what the May high was. Don't be fooled by the last 2 weeks of sideways action, the market is about to get very interesting. In the next few weeks the bulls will try to push to new highs, as the bears will try and sell it into the 4-year cycle low.

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