First, here is the Backtest of the November 2012 low scenario, which has us going down into the end of the year:
Second, here is the bullish scenario (which is also in the tabs above) which has us rising into the early 2014 for a major top:
Third, here are all three scenarios laid out on the SPX chart:
I continue to stay present and not try to predict. Here is what is instructive. All three scenarios have a September low of at least SPX 1580-90. So, now that we have registered closes below the 13 EMA, which is what I had been waiting for, I believe we have likely started the moves.
I probably favor the more bearish scenario, but there is a symmetry in the bullish scenario so I won't rule it out. Price is the final truth and arbiter. The CYAN scenario in the last SPX chart above is really just a big wave 4 before the final push into a top at the beginning of 2014. The other two scenarios call for a backtest of the November 2012 low. If the November 2012 low breaks, then I think we are going to that unfilled gap at SPX 900, or probably lower into the 800s, next year. Until that low is tested and breaks, however, I am tracking at this level and not dreaming the big bear dreams. Essentially, by using the analogs above, I have road maps where I can track what is occurring and know if we are likely in one of the three scenarios, or whether something else is occurring. Right now, I expect a low into September and I want to see where that low occurs to assess trend. I expect 1580s minimum even under the bullish shallow correction scenario. Analysis is all fine and dandy, but trading still carries risks and requires setups. Following the short term setups, we have broken the 13 EMA on the daily, we have declining momentum, and we have an inside weekly candle off the upper bollinger band. Indicator wise, we have bearish signals flashing, but I am still waiting for a few to flip. However, given the price setups as indicated in the prior post, I have tripled my short term Wonderwood position (see names of trades above). See Weekly Update Post Early Today.
I like to plot out the scenarios at key junctures (especially the ones that could go against me) like this so that I am not confused or wondering about price moves and potential support areas. So, if (middle word in life), I have the scenarios right the next move should be upon us or starting (between now and possibly Friday if this break of the 13 EMA fails and the market one last run in it). We should head down into September.
Peace, Om,
SoulJester
