Market Monitor Update, Friday, 04/17/2009 02:05:41 PM EDT
by Keene H. Little
HAVING TROUBLE PRINTING?
Looking at the rally for SPX in the same way as I showed for the BIX, that is as an a-b-c bounce off the March low, the first Fib projection for the c-wave is at 876.75 (possible at 882 depending on where I consider the end of the a-wave). This projection currently crosses the top of the potential rising wedge pattern (trend line along the highs since March 23rd) at the end of the day. The move up from March 30th looks like the c-wave and needs to be a 5-wave move. Within a rising wedge pattern there will be overlap between the highs and lows and with today's rally it can be satisfactorily counted as completing.
SPX 60-min chart:
A move up to 882 would give us a throw-over above the rising wedge and from there if it were to drop back down below 876 and back inside the wedge we'd get a sell signal from this pattern. The bullish wave count calls for multiple degrees of 3rd waves to unfold to the upside and while that's clearly possible I don't see the technical indicators pointing to that right now. But any rally above 885 would have me turning bullish regardless of the other indicators--they'd likely strengthen in a hurry.
So it's a good setup to short the market but beware that SPX could still push up as high as 882.