S&P Primary and Weekly cycles
August 50% level rejection pattern @ 1311, has led to as 'thrust' pattern downward:- top-to-bottom 5-day cycle.
This then resulted in a breakout of the Weekly lows @ 1272, and also below the 3rd quarterly 50% level @ 1266
Once that occured, then the Primary cycle takes over, sending the S&P 500 down into the primary support levels @ 1169/1273
1169/73 is a major support, and the 3rd Quarterly 50% level @ 1266 is a major resistance zone over the next 2-months.
Even though the trend has found support, my view is that it will double dip into August lows.
In my new book there is a section that clearly describes the current market conditions from pages 120 to 130, which spells out the possible price action over the next 2-3weeks, as described below..
S&P Monthly and Weekly cycles
If the current price action follows those text-book patterns, then the trend should move up into the Weekly level and then continue down into this week's lows @ 1144.
That pattern will complete the break and extend pattern from last week's lows @ 1272
If that plays out, then the following week should begin with a 3-5 day rally, that could go as high as the Quartertly 50% level @ 1266
Once that plays out, then the trend can often drop down from those levels and continue down into the August lows later this Month @ 1115
Those August lows, will once again be another long term swing point (BUY), that should see the market stabilise and move upwards into a large consolidation pattern for the rest of 2011.
Therefore over the next 3-weeks there should be a lot of volatility, and if it plays out as described then there's good money to be made
Of course it might not do any of that., but lets see how it goes.
Footnote:- This week's report was written before Standard and Poor downgraded the US credit rating from AAA to AA+, how it changes the analysis over the next 5-days is yet to be seen
