The market action since March 2009 is a bear market counter rally that is presently nearing a final end in a classic ending diagonal pattern. The Bear Market which started in 2000 will resume in full force by late spring of 2011.
We presently have the early beginnings of a 'rolling top'. We are seeing broad based weakening analytics and cascading warning signals. This behavior is typically seen near major tops. This is all part of a final topping formation and a long term right shoulder technical construction pattern.
Highlight examples of weakening analytics and warning signals are as follows:
- Rising Termination Wedge pattern in the Industrials and S&P 500 since the July 2010 lows.
- Elliott Wave, Gann and Weekly/Monthly Full Stochastic confirm ending rally highs near at hand.
- Significant Bradley Model Turn Date of February 18th.
- Asian & World Market Weakness Leading US Markets
- Fibonacci Cluster Dates showing reversal timing.
- Inter-market Divergence with new highs in the Blue Chip DOW Industrials with lower closes in the S&P 500, Nasdaq, Russell 2000 and Trannies
- Extreme Bullish Sentiment indicators from every methodology we track.
- Bearish Divergence between 10 Day Advance / Decline Line Indicators (NYSE, NDX, RUT) versus Price
- Confirmed Hindenberg Omen from December
- Weakening Breadth - 10 DMA A/D Line versus NYSE, NDX and Russell 2000 price.
CURRENT MACRO EXPECTATIONS
OUR CURRENT MACRO EXPECTATIONS FOR FINANCIAL EQUITY MARKETS
The following schematic best represents the US S&P 500 Stock Index
SIMPLE GANN ANALYSIS
ELLIOTT WAVE COUNT
CHANNELS ANALYSIS
S&P 500 TARGETS
Near Term Support
We see the near term support to be approximately 1222 on the S&P 500. There is a possibility the sell off may gain momentum and find support at the lower end of the band (see bottom chart) at 1169 but we are skeptical of this because it is unsupported by Gann Analysis.
Intermediate Term Top
Our target for an Intermediate top is 1344 on the S&P 500.
Time Frame
We presently see this Bear Market counter rally which started in March 2009 ending 2011.45. This approximates to June 13th, 2011
We see strong support presently in the 1222 range on the S&P 500. This should hold any sudden fear from event news breaking on the Geo-Political from in North Africa and the Middle East.
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