Thursday, December 16, 2010

Time to be Vigilant

So far the high has been 1246.73 on Monday the 13th which is in line with the geometric cycle projection. (Dec 10-13)
The following levels should be support levels on any decline that is 'corrective' in nature:
1235.19: Wed's close & Range Harmonic.
1227.08: High November 5th.
1219.80: Range Harmonic & April 26th high
1173.00: November 16th low & Pivot Low.

The behavior of the RSI during this early decline will be important to monitor since it will reflect the nature of the decline--whether it is corrective or impulsive. The next Energy Date is expected between Dec 20-22nd. If the market has enough upside momentum, the decline could terminate and the S&P may make an attempt at the 1250-1255 area before an intermediate term correction begins. (Possibly Jan 4-8)

A break below 1219.80 will suggest that the decline is gaining steam and that a confluence of longer term cycles may be affecting a turn in the market. The metal markets and currencies will give clues about where the S&P is headed. Breaking 1173.00 and a serious decline may have commenced.
Note how the lower tine of the yellow pitchfork intersects the 1219-1220 level during the Dec 20-22nd Energy Window--it currently is acting as support at the 1235 level..

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