The SPX continues its run to the 1520-1540 confluence area – a home for two vertical count targets and the ascending internal resistance line. If the price is destined to take a pause in the ongoing rally, I think it’s going to happen in that area. Actually, on Friday the SPX stopped just 6 point short from 1520.
The price behavior around the 1520-1540 area in the short-term will help in projecting its next move. In the meantime, the horizontal count from the October – December retracement on the 1-box reversal chart gives 1590 as a potential bullish price objective. The strong price action in January, when only X boxes were printed on this rather sensitive 1-box reversal chart, makes the 1590 target believable. However, before the 1530-1540 targets are reached it makes sense to keep 1590 in mind and concentrate on the near-term price action.
All market sectors remain in buy mode. The Sector Breadth Model showed strengthening internals in the Financial, Technology, Staples and Utilities sectors this week. We have yet to see the signs of sector breadth deterioration to start worrying about a meaningful market correction.
Thanks Igor! You always surprise me with new information I normally don't find anywhere else. If this run goes all the way to 1590 before serious pause, I'll be stunned, as no one expects it will go that far without some correction. But you've been right before, and people with upper hand in this market love to run the wall of worry and continue upward movement longer than anyone expects... so it might be. God bless you for all your unselfish work!
ReplyDeleteHi Rajko,
ReplyDeleteJust to be clear, I don't know if the SPX will run to 1590 without any correction. 1590 is the potential price target which is calculated from the October - December correction. Actually, I think that the price will pause in the 1520-1540 area. If the price moves sideways or reacts a little in this area, a new count will be established from the new congestion pattern. Comparing two counts will give more data to project a new potential target for the SPX. Until then I wouldn't put much faith in 1590 and would wait to see how the price behaves at 1520-1540.
Thanks for clarification.
ReplyDelete