S&P 500 – May 11, 2012

Index has been hugging the 89-wk EMA and the lower line of a channel that I drew a couple of posts ago. Hugging support is not a very technically good thing as it is viewed as a potential pause before resumption of the dominant trend which is down. That is where technical probabilities lie but it is not a 100% thing. Daily frame is oversold and, if bulls and dip-buyers are still in it, we should at least see a bounce. Note that weekly frame is not oversold. Failure to bounce from oversold of shorter daily frame may lead to a loss of the 1340-1360 pivotal area and due to overhang of the more dominant weekly frame and that may set the stage for a drop towards 1325 area or even 1280-1300 area

So, it is vital, IMHO, to hold the pivotal area and at least bounce

Without breaking 1340-1360, IMHO, there will be no need for any coordinated attempt to provide extra liquidity


Keep the peak of Oct 2011 and the low of Nov 2011 in mind. These are areas that must hold to keep the bullish bias of the current counts intact. A break of peak of Oct 2011 will imply that recent peak was likely not Major (black) wave 3. That still keep my preferred of the recent peak being Intermediate (purple) wave 1 in play. A break of Nov 2011 would render that count to the garbage can and imply that I have been wrong about the bullish bias of the broader market picture