If there is a correlation between this current rally that began on March 2009, and the previous rally that started in October 2002, then a good sized correction should be upon us at some point this year. Using monthly charts, the S&P 500 (SPX) bull run from October 2002 to October 2007 lasted 60 months. From a TD Sequential / TD Combo lens, the SPX endured three TD Sell Setups. The third TD Sell Setup cumulated in an array of competing counts – with TD Combo Sell “13” calling the top.
The situation now is not that different except this current run did have a 10% correction. Similar to the 2002 – 2007 time period, After the third qualified TD Sell Setup, TD Sell Countdown and TD Combo Sell are competing with each other and nearing a termination point. The current duration is at 63 months and counting. At this point, August 2014 looks to be a termination point, if not earlier. We’ll have to see if the daily and weekly can can create a sell signal congestion area.
In the meantime, equity markets have an upside bias, although there has not been any upside thrust. Tomorrow’s Fed event will likely be the game changer.
S&P 500 (SPX) SHORT TERM OUTLOOK: BULLISH
Switch back to neutral if SPX closes below 1935.83.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL
Switch to bullish if SPX closes above 1943.89.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BULLISH
Flip to neutral if SPX closes below 1900.53 next Friday, June 20, 2014.
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Switch to neutral if SPX closes below 1859.45 on June 30th (updated June 2nd).