Today the SPX hit the doubling number from the March 2009 low, up 100% in 24 months from 666 to 1332; or up 28 points per month for two years straight. 1332 also represents a 75% Fib retracement, shown by the small blue line. Over these many months it is easy to see why Fibonacci retracements are key, simply look at the reaction of price at the Fib levels. At the same time, the SPX was running with the H&S, red bars, which targeted 1234. That area was hit in April 2010 when we pulled back sharply. SPX came up to test this 1240-ish level again in November 2010, started to falter but the bulls pushed it up and thru for another 100 points.
This chart illustrates the QE effects nicely; QE1 from March 2009 thru March 2010 or 12 months of oomph, while QE2 which is ongoing now with the POMO pumps, got us six months of oomph if we pull back now. Following the regression, does the future QE3 give us only three months of oomph?
This current area of 1225 to 1235 is important as per previous charts highlighting 2006. Pesky RSI won't give up its bullish momo and it wants another higher high again, at least a matching high. Thus, mix all this together, and an 'M' top is an educated guess. The M top will allow the RSI time to line up with negative divergence and then everything can go down together. This information is for educational and entertainment purposes only--do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.
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