aarc

Sobering Stat: ARMS Index Indicates Market Is at Peak, Not Bottom

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TRIN reading aside; the technical picture on both daily and weekly charts have significantly improved with the rally of the last 2 weeks.

Momentum indicators on both daily and weekly charts are indicating they can support further rallies. Short-term Elliott waves analysis also supports further upsides. Longer-term,; EW analysis points to lower lows. But that is the nature of TAs; short term can be bullish but long term can be bearish until proven wrong -- and vice versa.

The monthly chart is still significantly bearish and is still trending down using the basic ADX indicator.

The SnP500 is now projecting a target of 1063 to 1075 within the next 2 weeks if the bulls can sustain the rally using Elliott waves analysis.

Minor resistance is at 1043 which is the 2x fibonacci price projection on the daily chart of the June to July correction and a major resistance at 1055 which is the monthly 20ema that is trending to the downside. We don't know if those resistances will work or not until the bull/bear battles had been completed at those levels.

For the bears; it is very hard to make a reasonable technical analysis since there are lots of strong supports below such as the daily 20ema support which is now trending; the 1018 support which was tested last Aug 27; 956 which is the last high of June. We can also add the daily 50ema, the daily 100ma, the daily 200ma supports, etc. There are also a plethora of fibonacci retracement levels down there that can provide supports on both daily and weekly charts not to mention their own moving average supports. And the monthly chart has the 10ma which is being used by some TAs as initial support for long-term position holding in situations such as we had these last 2 years.

At the current stage; the highest probability is that any selloff or correction will be bought by the bulls or by those who failed to buy at the bottom and/or failed to fully or partially participate with the recent rallies since March 2009. Whether or not their combined efforts will prevent a potential meltdown and sustain the existing 6 months of rallies nobody knows for sure. But we can be sure, lots of those who had been left behind will take advantage of any pullback or correction.

For the armagedon'ers; here is the scenario just in case we drop like a rock from here: a normal target range of from SnP 721 to 635 with a maximum target of 524 under extreme conditions. These targets will have to be adjusted depending on when and where the expected "big" correction actually start to happen and sustain, if at all.

So the possibility of SnP going to 500 or lower as the major doomers have been "preaching" goes into the low probability scenario.

There is a very small window of opportunity for the bulls as of Friday or Aug 28 to execute the next rally, so they will have to do it early next week. Until then, we don't know what the next move will be for the bears. The bulls are holding the ball right now.