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

Two weeks ago the price had reached the level we had forecast for a low but the pattern of trend getting down there and some of the internals were getting scary.  One of the criteria to indicate a solid low was the ability of the index to move above resistance.  The 1/3 to 3/8 level represents resistance that keeps the downtrend intact.  A ¼ retracement keeps the downtrend in a strong position so it is very important the index move above the 3/8 level to give confidence a selloff will present a higher low and not resume the downtrend.  So that criteria is still in place.  Our forecast called for a low within this time window (45 calendar days from high) or around the 25^th June at 60 days from high.  IF today exhausted the rally and a new low occurs, that new low should hold 1012 to 1018.  I was really hoping the index would go lower and wash out the seller and that can still occur.  One more marginal new low is probable.             

The volatility and volume the past 45 days are a strong indication this is starting a distribution and setting up a top.  This top could consist of a marginally higher high above 1220 (the last high) to 1247 or a secondary high which would be a lower high but very close to the 1220 high.  There could be a lot of chopping around until the end of the month.  But it is important the index do some trading above the 3/8 level at 1108.  If there is a new low I am assuming it will be a solid low.

LET’S LOOK AT THE WEEKLY CHART

This is the range up divided into 1/8^th and 1/3^rd and the index is still hold above a 1/3 retracement which is keeping the uptrend intact.  Remember the 1/3 to 3/8 level keeps a trend intact by price analysis.  The 3/8 level is 1012 and is therefore very important in assessing the strength or weakness of a trend.  So as long as 1012 hold this UP trend remains intact.  This is a very clear 5 wave structure up and indicates a complete wave structure.  But there is no time or price action for distribution.  A great many stocks have the same pattern of trending and it would be unusual to reverse trend without months of “trading on the side” or at least a secondary high.

THE NEXT CHART IS THE FORECAST for the next 2.5 years—I last put this up on CNBC in early May— this is that same chart.

Nothing has changed I still expect we are now in a period of distribution that could take as long as 6 months.  I cannot give the date the bear trend starts (yet) but the ending date is either of the two dates shown.  The start of the bear could be as early as Aug/Sept. but that is guessing at this point.  The high on the chart was exactly 50% of the 5 year cycle helping to confirm the validity of the timing and the exact date of the end of the bear trend.    

Disclaimer: All the reports and content in the entire McLaren Report web site (including this report) are for educational purposes only and do not constitute trading advice nor an invitation to buy or sell securities. The views are the personal views of the author. Before acting on any of the ideas expressed, the reader should seek professional advice to determine the suitability in view of his or her personal circumstances.