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S&P 500: Make or Break Time

1/31/10

 

 

Make or Break time:

 

Below 1114.25 moved the handle to open the correction door

Below 1099.00 opens the CORRECTION door.

Below 1088.50 to 1084.50 places one foot in the correction room

Below 1069.25 puts both foot in the correction room

Below 1066.50 opens the trend reversal door

Below 1050.50 is a confirmation that this is a correction 

 

There is a vast difference between a correction and a trend reversal

A correction takes us down to 920.75 to 952.00, and then we head back up to new highs (1268.00 to 1295.00)

 

A trend reversal means 1148.00 is the high for a long time 17 to 43 months

In addition it means we make a new low (below 665.75) down to 558.50 to 470.00 in fact down to 330.00.

 

 

The below pattern is our dominant pattern for time, price and range.

 

Long Term: 458 to 687 trading days

Today is the 324th day

Master RCT

From: 10/16/2008

Equalizer: 952.00

Up Price Target: 1295.50 (we reached 1148.00)

Up Extension: Up to 1352.75

Down Price Target: 608.50 (we reached 665.75)

Down Extension: Down to 558.50

Upper Wall: 1066.50

Lower Wall: 865.50

 

From the low at 665.75 up to the lower wall at 865.50

The time duration of the move was 116 days

From the low at 665.75 up to the upper wall at 1066.50 took 232 days

From the upper wall at 1066.50 up to 1148.00 took 78 days

From 1148.00 back down to the lower wall at 1066.50 took 13 days

Therefore on this sharp decline we have a factor of 6 (78divided by 13 = 6)

From the lower wall at 865.50 up to the equalizer at 952.00 took 43 days

From 1066.50 down to 952.00 should either take 7 or 28 or 43 days.

From 1066.50 down to 865.50 should take 116 days

Therefore 1066.50 (upper wall) is as crucial as crucial gets in the market place

We have a 6.00 factor, which means a 6.00pt.  Lenience factor which is 1060.50

And a 13 day lenience time factor.

 

Immediate term: NOW

We have three patterns

But before we discuss these patterns

We must look at this

We spent 181 hours up in the 1140ish level before we broke out (down) from the pattern. On our current pattern we spent 112 hours before the break out which is 62% a key Fib. number. In addition the transition move (down from the top to our past congestion level was 42 hours which 38% another key Fib. number. 

Why is this important?

It validates the structural developmental of the decline from 1148.00 to now.

 

The first pattern is the nucleus of the compression from our new price level following the decline from 1139.25 which means it is the catalyst for all current motion.

RCT

Pointing Down

Equalizer: 1090.50

Down Price Target: 1062.00

Down Extension: Down to 1058.50

Up Price Target: 1119.00

 

This below pattern is also significant because it developed a RCT. C/T’s that develop a RCT are dangerous, because they have reversal properties.

C/T

Pointing Down

Equalizer: 1087.50

Down Price Target: 1060.75

Up Price Target: 1114.00

 

RCT (this pattern was created by the above C/T)

Pointing Down

Equalizer: 1091.00

Down Price Target: 1053.50

Up Price Target: 1128.50

 

In order for this current decline to continue we must reach 1060.75, otherwise we reverse back up to 1114.00 before you can sing Dixie.

 

Short Term: (from 10/20/09)

The below pattern is our also a key pattern.

It confirms the correction and opens the door for a trend reversal

That key pivotal price is 1050.50

RCT (from 10/20/09)

Time expectation: 86 days from 10/20/09, today is the 70th day.

Neutral

Equalizer: 1050.50

Up Price Target: 1180.25

Down Price Target: 920.75

Down Extension: Down to 866.50

Upper Wall: 1093.75

Lower Wall: 1007.25

 

What bothers me the most concerning this decline is the high number of argent bulls that switched sides so quickly. I don’t have problems with switching sides, but I have problem with how quickly they switched, generally this is reflective of a subjective opinion as opposed to objective.

 

From 1066.50 up to 1148.00 took 78 days

From 1148.00 back down to 1066.50 took 13 days

Generally this is how trend reversals behave.

 

Due to the Long Term Master RCT’s ranger count 229 points

We have a dominant 86 to 88 point price range swing pattern

5 swings since 7/8/09

 

12 swings since the Master RCT was formed on 10/16/2008

 

 

Since March 09; the last and largest decline was on 7/8/09 to 6/5/09

 

Which was 87.75 points and took 22 days.

 

1148.00 - 86.00 = 1062.00

1148.00 – 87.75 = 1060.25

 

Recent massive redemptions from US equity funds of $8.3bn, is the largest outflow since 23rd July 08 = retail capitulating out of US equities

 

Regarding the chart:

The dashed red line is a TIME trendline

It’s a key line from the middle time point from the above formation connected to our current middle time point. Time trendlines determines market timing..

 

Masterchetrading@gmail.com