Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Fog of War

SnP500 was able to break above the 1312 'do or die' line in the sand or 61.8% fibo retrace of the vertical run down - to mitigate the massive momentum generated by the hard fall.

For the bulls, these are the most obvious patterns to hang on to:




The daily is still too ambiguous since I can't find a high confidence wavecount.  The weekly chart Positive Reversal Setup triggered last week and is still viable as long as the low of March remains intact.   The inverted hammer for June 2011 is mildly positive but not necessarily bullish since it is a red bar at the top of the run from March 2009 bottom.  The 10ma support cannot be relied upon on first test - too iffy.  If the markets are decidedly bullish, then those 'extremely bullish' monthly chart trend traders are going to use that support as their entry on every attempted test until it is no more.  Target range for the 5th wave will be higher if an ascending or a pennant triangle formed for the 4th wave.

For the bears; it ain't over until it's over:



There are many potential entries for the bears to add positions or to initiate new ones with 1344 major short-term resistance the most obvious choice since it has already proven itself twice on re-tests after the second breakdown during the early stages of struggles by the bulls.

The Fog of War is still as thick as it can be.  Nobody has a clear winning edge.

That's the peril of trading the markets while it is still at or near the middle part of a consolidation or trading range.  My former guru hated it too much 'sleeping' over extended period of time (going hungry) was the preferable option rather than trade the whipsaw maniacal price runs. 

Watch and Wait is now the best course of action short-term. 

Mid- to long-term, SnP500 still got the undisputed bullish edge.  So hang in there.  The trend is a friend until it is no more. 

Notice that SnP500 was able to break above the confluence of moving averages' resistances on the monthly chart.  That is one heck of an accomplishment given the vertical drop it suffered from 2007 to 2009.  But if you are used to trading double top flat patterns on shorter time frames = par for the course or run-of-the-mill as we call it.  The monthly chart makes this basic pattern so gigantic.

I expect a major mid-term correction of more than 20% loss for the SnP500 more likely starting early next year presumably similar to what happened to Dow Jones from year 2000 to 2002 - IF and WHEN SnP500 is able to rally toward the 1576 Triple Top level for a complete 1-2-3-4-5 impulsive wavecount on the weekly chart. 

Tomorrow is 1st trading day of the month considered bullish BUT we will have a long holiday for July 4th that will more likely dampen whatever bullishness has been generated over this 4 days of rally.