LET'S LOOK AT THE S&P 500 INDEX DAILY CHART

Two weeks ago on Squawk box I indicated there were only two alternatives for the index. It would go down to 880 and bounce and that bounce could test the highs and start a large sideways movement into early September. Or a weak bounce from the 880 support and a move down to 850 and then a run to the June highs. Both probabilities indicated a test of the highs.

We thought the standard cycle for this index would prevail at 45, 60, 90, 120, 135 and 180. There was a chance for a sharp decline after the expiration of 135 days or around the 21st. If that does not end the rally then the index could run out to the first of September at 180 days from low. This last low was a ¼ to 3/8 retracement for most stock indexes including the FTSE and holding 3/8 or higher holds this uptrend intact.

LET'S LOOK AT THE RANGE OF THE BEAR CAMPAIGN

We looked at this range last report. If the index can move past the resistance of 135 days early next week then the two significant levels of price resistance are 1/3 of the range of the bear campaign or 3/8 at 1007. The significance of the 3/8 level is historically in the Dow or S&P 500 if that level can be hit the index will correct back down. But the ability to reach that level of retracement (3/8) has always signaled the end of a bear campaign. If price can reach that level there will be a significant correction from that level but it will also indicate the next low would be a low to move above that 3/8 resistance and confirm the end of the bear campaign.

LET'S LOOK AT THE DOLLAR INDEX

For the past 6 weeks this index has been struggling down. It rallied 4 trading days into 96 days from high and almost 30 calendar days later it is still above the low of the 4 day rally. This style of move down almost always spikes up but if today is not a low then the index could spike down into July 27th at 144 calendar days from high. This has been a solid 144 calendar day vibration in time. The vertical lines are the divisions of that cycle and they have been exact. If today is not a low this could spike down to a minimum of 77.30 by the 27th. Either way the time window around the 27th will be an important date for most currencies.