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LET'S LOOK AT THE S&P 500 INDEX

S&P500

Last report 2 weeks ago I indicated the index would run down and successfully test the lows and drive back up towards the highs as I expect a very large sideways pattern for the next 6 months. Now that it is down here, holding looked in doubt and could still go to 1020/1030 after this rally is complete. The February low is deemed by the street to be "critical" and it is very "obvious" so if that is broken there will be some selling and the 1020 level needs to hold. If that occurs, it will leave a very high probability low with a "three thrust pattern." There are some internals as new lows over new high that are becoming very serious or close to giving a bear market signal. This is too early for a bear trend according to my 5 year forecast -- we need to see about another 6 months of distribution or big sideways movement. This is an extremely important rally and needs to exceed 4 days and is now up two days.

LET'S LOOK AT THE RANGE OF THIS DECLINE

S&P500

The size of this rally is very, very important. If the index can move above specific resistance the probability of another thrust down being a low is very strong. The normal counter trend in a down trending market is between 1/3 and 3/8 of the range. So the index needs to move significantly above that level to ensure another thrust down will hold or only marginally break the low for a solid low. Three eights is 1108 and 50% of the decline is 1130. The rally needs to get close to the 50% mark to have confidence a further selloff will not fall into a bear trend. We don't want to see a weak rally here. The "time" around 10 June could still be important, especially as a low.

LET'S LOOK AT THE US DOLLAR INDEX

US Dollar Index

The tops in most markets recently have been 180 calendar day cycles. I had forecast a possible top in the US Dollar from the 180 cycle months ago. The index has run up into that timing but I also thought it would touch the previous high at 91.75. This price is calculated resistance at 200% of the first leg and ¾ of the last range down with support at 83+. Double tops seldom end up trends so even though it looks like a top may be here as per the forecast. I like to see something to indicate trending down as a counter trend up. This is not high confidence as I thought the price would be higher but it is possible here.

 

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