S&P 500 Outlook

Since Point #4 was reached in the S&P500 with a 1850.48 high Double Top that was confirmed on a close < 1812 and ultimately the 50 day moving average, this index has been in overall sell mode. Every bounce or green day has been aggressively sold, allowing fresh shorts to reload or any existing longs to exit at slightly better prices than the previous session. Ounce this index reached 1775 it proved to be a decent support level that the market desperately needed to hold but ultimately failed. Any rallies into this failure can be sold for a test of the 1730 level, which in my opinion is the next pit stop for this leg lower. Here I anticipate there to be responsive buyers present defending this area. This level is an old naked weekly high that was established last year and was never tested. < 1730 is when I get more concerned as there is no support till the last years naked October Island Reversal. This level is where I believe the market is headed in the short term and if we lost 1730 it could get there in a hurry. Important to note that the island is coincide ding with key market levels like 1665 is the 10% correction from the 1850.48 highs, along with point #5. A pullback in my opinion to this area seems logical and this area of confluence gives more confidence to begin initiating new longs in this market. All in all the markets have a few reasons to sell. #1 being the index was at the upper extreme of its range testing and building point #4. #2 was when the double top confirmed moving < 1812 and closing under the 50 day. And #3 was all the emerging markets (Turkey) nonsense along with a market that was up +30% last year. Keep open minded, be ready for anything and watch the 10% correction zone that will build point #5.

S&P 500 Update 1812 level of interest for bears

4 Years To Complete AB=CD Move (SPY)

SPY Weekly

E-Mini S&P Futures 1342.25 "date complete" now what?

E-Mini S&P 500 Futures

With the objective of 1342.25 complete Click Here, now the markets can relief bounce. The market was wanting this level to complete for close to a week now and wasn't going to stop the selling pressure until it did so. The big money traders/smart traders have been short and are going to cover into this area as you can see from Friday November 16th, 2012 this was exactly the case. Also Apple squeezed out it's May 18th low of 522.18, which I anticipated that the selling pressure would not subside until it doing so, Click Here With Apple taking May 18th, lows out smart money traders who were short this stock covered on a break of those lows and a squeeze to the upside should be present in the coming days/weeks, in result propping up the Nasdaq and giving a lift to the overall sentiment in the market i.e. SPX and DJIA. At this point in the game the E-Mini S&P 500 Futures should see firm resistance on a releif bounce in the range of 1393.00 -1394.50 and major resistance for the week at 1431.50 Click Here where new (short money capitol) will be put to work. That's the short term expectation over the next week. IF these levels trade in the very near future I anticipate sellers to be present and for the futures to rollover and re-test and break the 1340.00 level. Note: my longer term thoughts on the market is for an ultimate test of the June 2012 lows of 1262.00 and for the E-Mini Futures to not stop selling until this level is squeezed out and we fill the New Years gap at 1252.50. To read my article S&P 500 Multi-Year Correction Expected Click Here.  Note: the reaction seen as the market entered the "Wop" sell window and my expectation of where the market was headed after seeing the rejection Click Here and Here. Also see that the 30 Year bond Diamond post  is making its move as expected and now attacking upside breakout levels.

S&P500 Multi Year Correction Expected

S&P 500 Monthly Chart

Looking at the S&P 500 monthly chart here (long term) this index has been in a massive bull rally since the late 1980's. For close to a decade the market pleased investors as the rally resumed to the upside but as a result started to become more volatile due to the birth of electronic trading. The S&P 500 ended up putting in a high in March of 2000 of 1552.87, and corrected/retraced exactly 50% from the March 2000 highs finding lows of 768.63 in October of 2002. This pullback gave investors a chance to reload/enter long on their investments or 401k's to target the March 2000 highs. As this is a longer term chart we are looking at here, we find out 5 years later those March 2000 high targets were completed. As a result of the S&P putting in new all time highs, smart money investors and traders liquidated into the completed objective i.e. a break of the 1552.87 highs. As a result of the objective completing this created an excess, false break high of 1576.09. Known as the 2007 high many of our family members and friends are well aware of the nasty pullback we saw for 2 straight years of selling pressure. Many investors and people with 401k's saw their life savings and retirement diminish in front of their eyes as they were shocked at the continued selling pressure. After all the stimulus money etc. was pumped into the economy, the S&P found support putting in lows during March 2009 of 666.79. At this point the markets began to dead cat bounce as unemployment, though high, was showing some signs of stabilization. Now its October 2012 and markets have been in dead cat bounce mode for 4 years. Though the markets have been rallying for 4 years now its imperative to understand that this rally is one to sell. This is a Sell Mode Bias Rally, meaning the rally will more than likely not continue much further and undoubtedly not take out all time false break highs of 1576.09. Money managers, Institutional Investors (if wise) will understand this and begin to unload long positions or flatten up and sit on the sidelines, though hedge funds will aggressively begin selling short the market as a whole expecting a serious correction to the downside. Well, if they are not in my opinion they should be. My Key Reference Area "Wop" Window of Opportunity to sell the market has been entered. The Wop range is 1437.11 -1474.25. The Current S&P 500 high for October 2012 as I write this is 1474.51 (1) quarter 0.25 cents above my window and we are currently selling printing 1408.42. So the "Wop" did it's job by putting a lid on this rally from the 666.79 lows. As the market enters the "Wop" short trades can be placed with stops above the false break high of 1576.09. Or if you can't short the market long term 401k's should be liquidated into this area i.e. flatten/sit on the sidelines. With the S&P 500 moving into this area and seeing selling pressure active, (entering "Wop" and target hit) this gives us a very scary downside objective of 448.78. All those that say this can't or won't happen, are the ones that typically are trapped in the market buying false break highs like in 2007. Who would have ever thought we would have printed a 666.79 low in March of 2009? Many investors and market experts didn't think we could see those kind of numbers but we did. The month of October is a very important month for the market. A monthly close less than 1422.38 signifies that the trend is apt to reverse and that the bears have regained control of the market. If this occurs we will have a resistance range from 1422.38 -1474.51 and in my opinion will begin attacking the 2012 June low of 1266.74 to start the larger time frame trend-change. My overall expectation, to some, may be far fetched but to me I would not be shocked at all if 2013 will be token-ed the 20th century depression or crash similar to the 1987 crash. I feel obligated as a trader to warn my family and friends what the outcome for the next few years could be. There's a lot of hard working individuals our there that contribute to 401k's and I would hate to see their accounts get cut in half over the next year like so many were in 2007-2009. 

SPX Daily

SPX Daily Building #3 Test Trendline