Price pattern indications, sentiment and expectations

We see this upcoming week as a flash point that will cause the market to finally make a decision. If the 2506-2510 SPX region continues to hold as the resistance point, and we turn down and possibly break below 2480SPX, we believe that the drop may retest the 2400SPX region again. Actually, at this point in time this is what we would prefer to see.

However, if we do not see a turn down at 2507-2510 SPX, or if there is not a strong break below 2480 SPX, well in that case the market is sending us a message that it wants to head to at least the 2550 SPX or even as high as the 2600 SPX region before the third wave of our model is completed.

Should we see a strong break above 2510, with follow through over 2520 SPX, we will move our support or resistance level up to the 2496 SPX region. We expect that this support region will be tested should a break out be seen, should that hold, then it sets up the market to head up towards the 2548-2550 SPX region in the coming weeks.