LET’S LOOK AT THE S&P 500 DAILY CHART


 

The index has moved into the calculated resistance zone we forecast many months ago and runs up to 1063.  The time factor we felt was significant would be 180 to 184 calendar days from the March low or around the 5^th of September.  Our forecast has been for the index to run up into that time window BUT if the index has a very sharp break into that time window then the index would be tracking exactly the cycle from 1938 and 1974 and that would make my job very easy.  If the index does go up into that time window the move down will be a correction to the trend and not change the trend. 

The consensus numbers are starting to get frothy with very few bears and lots of bulls.  This is not precision timing but does indicate a spike up could exhaust this section of the trend.  The “normal” trend in this circumstance can run to 220 to 270 calendar days.  So even if the index runs down from the very powerful 180 day cycle the odds favor it coming back up for a marginal new high or a test of the high.

In the short term the index found support on top of the previous swing high and showed a reversal and closed strong.  This is classic support and with the index in a strong position technically the uptrend should now continue.  BUT whenever the S&P shows a reversal day up within four days of a high and can’t extend the move up the next day and closes below the low of the reversal it has a good probability of indicating a top of some sort.  But not a final top to this move up.  This leg should have more “time” to run.

LET’S LOOK AT THE US DOLLAR INDEX


 

This trend is a bit unusual.  You can see the first move down from the high was vertical and the second leg down was also very strong.  But this last leg down, which should have also exhausted into its low, has been struggling down.  A struggle can break either way but this could be setting up a low.  The time was 45 days high to high followed by the exhaustion low at 90 calendar days and now 180 is in view.  You’ll note the last high was against the 90 day low and if the index is going down that would be the spot for resistance.  The time factor expires on the 3^rd and if the index limps into that date it could represent a low in the dollar and a high in other currencies.  So if you have short term currency positions you may want to monitor the markets closely within that time window.  With the entire world bearish on the dollar there could be a surprise coming.