Friday, October 18, 2013

The reaction to earnings has been generally positive. The markets are about to leave from the worst seasonal time of the year into the best time of the year starting in early November. There is no worry of any government gridlock until mid-December when the same political players meet to form some kind of budget committee. With the Fed keenly aware of a dysfunctional government that may stay with us even after the mid-term elections next year, the odds of tapering are getting smaller. Now take in how large market participants are lagging behind their benchmarks, and would need to start pressing their bets to close the gap, the bullish construct is that this rally can persist far more than what traders think for the end of the year. Bearish divergences are happening but the bulls can always work through it before it really matters. Then there is the unforeseen exogenous shock but we all know we cannot trade for that scenario.

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S&P 500 (SPX) SHORT TERM OUTLOOK: BULLISH

Will flip to neutral if a 9 count records for the 4 hour TD Sell Setup or if the SPX trades above 1750 and subsequently trades below it on the same 4 hour time frame. Image

While the market has been impressive, it does not automatically go straight up. Utilizing the Fibonacci tool box, the SPX is about to hit the 1750 Fib cluster just when the TD Sell Setup is about to record next Monday.

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BULLISH

The SPX will be tested early next week but absent of negative headwinds, look for a pullback to resolve sideways. ImageImageImageImage

A few more up days like today would bode well for at least a rest in the SPX as TD Sell Setup, TD Sell Countdown, and TD Combo Sell will collectively signal price exhaustion. This should come early next week but at this point, any pullback should be viewed as a buying opportunity. Other related indices are suggesting the same.

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BULLISH

SPX has cleared the 1711.44 closing marker for continuing gains. There will be further confirmation if the SPX closes above the 1737.48 risk level established by the August 5th weekly close. ImageImageImageImageWith the SPX on a 6 count TD Sell Setup, there is more upside for at least 3 more weeks before a more serious re-evaluation.

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S&P 500 (SPX) LONG TERM OUTLOOK: NEUTRAL

Market is extended and within’ the risk level parameters of the 9 and 13 TD Sequential clusters in April and May. (last updated September 30th)

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