FIRST LET’S LOOK AT THE S&P WEEKLY CHART

This chart shows the range of the bull campaign divided into 1/8^th and 1/3^rd.  Dividing ranges into these simple mathematical divisions are by far the most accurate roadmap for support and resistance and extending those ranges up or down are also the most accurate for projections.

The normal first leg down or first thrust down in a bear campaign is 20% to 25%.  If that occurs it could take three or four months so there will be lots of counter trend rallies.  I said that is the “normal’ first thrust down, the only thing abnormal about this bull campaign is the percentage gained was small considering the length of time.  Whether that indicates a larger or smaller first leg I can’t forecast yet.  It would be normal for this index to retrace a minimum of 1/3 to 3/8 of the entire up trend and a bounce from the ¼ mark or 1360 will also be very likely.

NOW LET’S LOOK AT THE S&P DAILY CHART

A few months ago I forecast that we’d see a 90 day cycle for high and a 135 cycle for lower high and a possible crash.  That vibration in time did occur but unfortunately started from the March 6^th low rather than the lowest low on the 14^th. The 135 day cycle also showed a higher high and false break top instead of a secondary or lower high.  Every crash or mini crash in the US stock indexes has come from this vibration in time.   There have also been two instances were the moves down were only 10%.  Since there is yet to be a secondary high there is much doubt to a mini-crash pattern.  These “mini crashes” always come from secondary highs.  Please follow my logic, the current support is the “Obvious” support of the February high and is significant because if the trend is to maintain the fast high momentum, this would be the low price.  A bounce from this level would occur if the trend were up or down. But since I believe the trend is down the rally from this level should fail.  There are two short term probabilities for a rally from this support.  Another small rally day or an inside day, followed by a resumption of the down trend on Monday.  Or a rally of 7 to 12 trading days producing a secondary high and resuming the downtrend and possibly another fast move down.   If the rally can exceed 13 trading day then I’m wrong.  Remember if the trend is down that first leg will take three or four months to complete, so there will be counter trend moves up.  Since the index only has a 45 day distribution pattern it is possible to form a larger topping pattern with a retest of some sort after further move down.  But I have to rank that as a low probability due to the time of a one year, 5 year and 135 calendar day cycles all come out within a few days.  Historically that carries a probability of changing the trend.