On 9/14/09, in Market’s Elephantine Memory, I had identified 2 significant resistance points 1060.8 (2004 low that launched a 3 year Bull into 2007) and 1105-1132 zone that in essence was the “market failure point”. When markets bottomed in March 2009, I expected markets to reach the “market failure point” – at 1105. We got close enough last week to roughly 1102 SPX Cash.
– The first area held the markets for a month, until eventually SPX closed September at 1057. This resistance led to a sideways correction essentially but longer in Time duration
– This formed the base for assaulting 1100+ market failure point, and it occurred last week. By principles of alternation, I expect a quick correction from this Price zone, shorter in duration yet larger than the preceding correction
– Expect SU behavior into October close (I had advised not to short after October 3rd lows – “financial harakiri”, unless you are nimble). This was said in late August. We are into last week of October, and I expect SU behavior.
– I don’t expect significant breaks from last week’s range trading (4 x 20 point moves, 2 x 15 point moves in a 30 point range). 1063 ESZ9 is the line in the sand for Bulls.
– But come November things should get exciting on the downside.