Friday, January 18, 2013
Jan 17. SPX, How Far Will It Go?
The SPX has reached a five-year high and generated a new buy signal on the medium-term P&F chart today, confirming bulls’ determination to achieve the 1530 target established in October 2011. On December 03, 2011 analyzing the SPX medium-term chart I wrote:
On the upside the surge in October established and activated a new vertical count pointing out to the 1530 level. It is very close to the projected price target of 1520 from the horizontal count from the 2009 lows on the long-time chart. Two counts from different locations on different time frames target the 1520-1530 area. It gives more weight to this area if the price moves higher from here.
The SPX was at 1245 at that time. It’s just a reminder how important the 1520-1530 area is. The vertical count from June points to 1540 in the same area. I have drawn the internal support line from the first reaction after the October 2011 rally to highlight the significance of the 1520-1540 area. This line served as support in November 2011 when a Symmetrical Triangle was forming. Later it provided resistance to the summer rally in 2012 and signaled about overbought conditions in September-October. I expect this internal trendline to be meaningful in the future as well. We don’t see it on this chart, but this trendline is hovering at 1520 above the current X column. Odds are high that the 1520-1540 area is the final destination of the ongoing rally.