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TAM's Morning Cup of Jo: July 12, 2011

|Includes: SPDR S&P 500 Trust ETF (SPY)

“The whole of science is nothing more than a refinement of everyday thinking.”
                                                                – Albert Einstein
Titanic’s Quartermaster wasn’t messin’ around yesterday when he yelled “All Reverse Full” as the global ship was taking on water. Today it looks as if investors are going to be fighting for the lifeboats once again; hence we need to know just how much water has the potential to enter the hull. Last week we discussed Andrew’s Pitchfork on the SPX which stemmed back to February of this year. July 1st, 2 Fridays ago, the SPX broke topside of the top tine, which also corresponded to its 50-DMA, and retested the backside of the Intermediate-term trend which it broke June 1st. Yesterday’s close tested the opposite side of that very tine and again the 50-DMA. 
SPX Daily 

Yesterday’s ‘Jo’ discussed relative volume and its importance. While we don’t want to harp, we now understand why we look at “ALL” the evidence. Today the key will be the close. As I pen this, 6 am, we have SPX Fut. down a net 7 pts, we have a few earnings before the bell (NASDAQ:FAST) and this afternoon (2:00) we have the FOMC Minutes. Meanwhile, back on the Western Front, our pundits will be discussing August 2nd and the infamous stalemate of the U.S. Debt Ceiling. Enough? Sure, it should make for an interesting day.
If the SPX breaks the 1,320 level, watch for 1,300 to be a small base. If it closes within the pitchfork it returns the pattern back to valid (one of the few times this happens in technical analysis). 
Side note – the whole fish for a day vs. teaching to fish thing:

{Reason Pitchfork remains valid: Newton’s law – Pitchforks can have many tines and states that every action has an equal and opposite reaction at some point. Hint: measure the high from 3 days ago from the top tine, draw a pitchfork parallel tine to the high, now subtract the measurement from the top tine and drop another parallel tine. – Got it? – amazing isn’t it?}
As Always, I Hope this Helps!!!
Until Next Time