Looking at an S&P Rally

 | Nov 16, 2012 | 9:20 AM EST  | Comments
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It's time to step back and take a look at the bigger picture in the S&P.

Let's start with a weekly chart with a peek at the symmetry that had suggested at least a minor correction in the middle of September. If you are new to my work, the definition of symmetry as I relate it to the markets is similarity or equality when comparing swings in the same direction. I often find that these symmetry or 100% price projections of prior swing will often provide key support or resistance in the market.

On the weekly chart below, note that the September highs were made after an important extension from the June 4 low was made on the upside along with the 100% (symmetry) projection when comparing a major swing on this weekly chart. Note that the October 2002 low to the October 2007 high lasted 807.46 points basis $SPX cash. Then look at the March 2009 low to the September 2012 high, which lasted 807.72 points. This type of projection is also known as a  measured move. Since mid-September we have experienced a decline that is similar to some of the larger declines seen on the weekly chart.  Let's take a look at those next as they will help us define some areas for possible support on the way down.

S&P Weekly 1
Source: Dynamic Trader

 

Some of the prior declines seen since the March 2009 low was made were:  277.06, 208.69, 155.94, 134.00 and 155.64. The most recent decline so far has been 126.46 so far. This is similar to the 134-point swing down. Besides, this projection that we are on top of, there is also an overlap of a .618 retracement back to the June 4 low along with a 1.618 extension of another swing. This indicates potential support at the 1340.51-1348.39 area that we are currently testing. Below this there is another price cluster zone that stands out at the 1318.87-1325.93 area. 

Now, besides support there are a couple of timing parameters that are also suggesting a tradable low in the next few sessions. Let's take a look at timing on the daily chart next.

 

S&P Weekly 2
Source: Dynamic Trader

Besides the weekly/daily price support decisions that are coming up, I am also looking at a couple of key timing parameters that could terminate the decline at least temporarily. One of the main cycles is the 618 retracement of the June 4 low to the Sept. 14 high, which comes in on Nov. 19. The second is the 100% projection in time of the April 2 high to the June 4 low, which lasted 43 trading days which comes in on Nov. 16. As of Nov. 15 we were 42 days down from the Sept. 14 high, which is very similar. 

Bottom line, all these factors that are coming together at this time are suggesting at least a corrective rally in the coming sessions. I will be watching to see if any of my buy triggers fire off between now and early next week. 

 

S&P Daily
Source: Dynamic Trader

 

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