Weekly time frame:
- SP 500 has not been able to overcome the last obstacle (November peak) prior to the May 2015 all time high
- The week ended with a Shooting Star. A short-term top could be in place provided last week low at 2073 is breached
- If the Shooting Star is confirmed we have three potential targets: S1 at 2040; S2 in the range 2029 (50 wma) - 2020; S3 at 1989 (20wma)
- In my opinion if a pullback is underway odds should favor a higher low, probably at the S2
- The scenario of limited downside and a continuation of the rally from the February low with a 3-wave up leg could result in an Ending Diagonal, which would conclude the entire advance from the 2009 low
Daily time frame:
- SP 500 has carved out a potential reversal pattern (Rising Wedge)
- A confirmation is needed by breaching Friday's lod
- If the reversal pattern is confirmed the pullback should bottom in the range 2020 - 1989
- The negative divergence of the RSI and the MACD suggest that momentum is waning
- The % of stocks above the 50 dma is still overbought and it is displaying a negative divergence
- The ratio VIX/VXV has dropped below 0.800 increasing the odds of a pullback
- VIX has also carved out a potential reversal pattern (Falling Wedge). If the wedge plays out we have R at 16.81 and initial target in the range 18.58 (200 dma) - 19.14 (0.382 retracement)
