Morning Audibles 6.10.10 Futures Are Up

S&P Futures are up. It's hard to really figure out "WHY", but perhaps there's some "hope" coming from an ECB meeting later on... The market had "wings" for a bit yesterday too after Bernanke spoke, but that didn't seem to last very long, did it?


I think the question here is... Notwithstanding AMEN RA's hurricane icon... "Where are we"?... There are some minor FIBOS in play and some Leading Diagonals ("LD's") associated close to those levels, but right now that range is fairly broad (meaning there can be some huge intraday swings in the market that LOOK like something major happened, but that really don't resolve anything...


So this morning I decided to take a larger view... This is a WEEKLY chart on SPX (going back 10 years)... It's too complicated to annotate on the chart, so I'm just going to paste it here, and make some comments below that correspond to the colors... I apologize in advance that there are a lot of different things on that chart (so I hope your eyes don't get sore)...

Notes:


LEADING DIAGONALS (black lines) - Note that the top LD does not extend from the March 2000 highs, it extends from the "breakdown point" (in October 2000) when the rally was essentially "given up"... Wavers would associate that usually with the end of a P2... Notice on this chart that this LD could end up co-inciding with an END of P2 (at 1219.8) from the March '09 rally... Notice that the next LD crosses some important barriers... It crosses the TEST of the 89SMA (in the summer of '06), and it frankly cuts right through the "collapse" in '08, as is as well associated with the February '10 lows of 1044, and the most recent low of 1040... This is CLEARLY a line some do not want to cross...


If that is taken out, it's anybody's guess where the next support level might be...


- 1016 (where there is a chart gap)
- 1000 (technically insignificant - but psychological)
- 992 (modest chart support & right about on the 89SMA - which, if you follow the entire 2003-2007 advance, gave a pretty good indication of where the market was going to be supported...


HEAD & SHOULDERS (yellow shaded areas above LD's) - It's just interesting to me that the "bubble" part of '06-'08 had this aspect... Now there seems to be a new one forming (albeit one LD "fan line" below)


FRACTALS (green boxes) - I had a "whistling" video up as a thread last week... I just want to remind everyone how closely the late '07 fractal looked to the February-April '10 moonshot...


RISING LD'S (red lines) - It's pretty clear to see how the candles & 89SMA behaved from the '02 bottom... I tried as best I could to draw a parallel diagonal from the March '09 bottom... Mainly what you'll note is that, AT MINIMUM, it would seem that if the market can get itself wrapped around some positive news, a path like that is going to be tested... That's going to put us somewhere in the 800's (and probably THIS YEAR)... Some may argue that the Fed will come in & intervene beforehand, but I dismiss that... Why? When do they EVER do that? In fact, they do just the opposite... You had BB talking positive just yesterday (which the markets responded to for about an hour, then sold off)... The FED is out of bullets (save for QE)... The next round will come AFTER the S&P gets into the 800's NOT as a measure to prevent that from happening... Until then, they'll just keep saying things like back in '07 like, "Subprime is contained"... yada yada...


So the bottom line, to me, at the moment, is to consider how long SPX can withstand and hold off crashing through 1040... It seems to me that any break of that level will be pretty violent... It'll probably take us somewhere around 50 S&P points lower (and could extend further)...


I just wish it would just happen (and get it over with)... You'd be likely to see a nice bounce off the next level, which would lead to some good trading opportunities over the summer (both long & short)...


Good Luck!


In other news... While you were sleeping, Obama won the Stanley Cup (in his spare time)...

Chicago Blackhawks 4 - Philadelphia Flyers 3

And this is how those gracious Chicagoans treat their good fortune (by "mocking" the other teams players and insulting women athletes in the process)... CLASSY!