1,688 on the S&P is a 1.25% retrace off the top and, failing to hold that, we're looking at another 1.25% drop to 1,667 and below that, we're back at 1,645, 1,622 and back to 1,600, which is our Must Hold line for this bull run to sustain itself.
Now 1,600 is a lot of 1.25%s away, so no reason to panic and we're certainly not panicking about a tiny little pullback (see Dave Fry's SPX chart) of a 350-point run (25%) since November and we're exactly where we expected we'd end up way back in March of 2009, when we called the bottom and begain using 800 on the S&P as a base for our 5% Rule calculations.
1,600 on the S&P is a 100% gain in what's about to be 4.5 years on Sept 9th. That's 177 points a year, 15(ish) points a month of gains for 54 consecutive months. That trend has certainly been our friend and, with all this free money sloshing around, there's no reason to expect it to stop – we're just looking for a pullback to test 1,600 and we've been looking for it since May. We got it in June but it reversed too quickly so we didn't feel good about the July rally and so, we're looking for a proper drop and just a little consolidation at the 1,600 line and THEN (assuming it holds), we can feel good about cheerleading the next leg up – to 1760.
I say FAKE, because almost ALL of them will be shited (not closed, shifted) to fake demand in the next 3 months over the next…
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