imo...and this is just my worthless opinion...i believe the top on the spx is in. of course, the market could prove me wrong and will watch to see if recent high is taken out. i highly suspect it won't.
fwiw, below is tony caldero's weekly update.
Blog
20 June weekend update REVIEW This week economic reports remained mixed. Housing starts rose but the home builders index declined. The PPI and CPI both remained positive and edged 0.1% higher. The Empire manufacturing index dropped, but the Philly FED rose. Industrial production continued to decline and is now at post WW II levels. The weekly jobless claims remained over 600K, while leading indicators remained positive. As for the markets, they declined for the first first since mid-May. The SPX/DOW were -2.8%, and the NDX/NAZ were -1.5%. Asians markets would have dropped 4.3%, but China's 5.0% rise put the average at -2.5%. The European markets were -3.4%, and the Commodity equity markets were -3.6%. Bonds were flat, Crude was -3.8%, Gold -0.5%, and the Euro was -0.6%. LONG TERM: bear market We continue to maintain the position that this bear market is not over. At best we see a retest of the Mar 09 low (SPX 667) in the months ahead, at worse SPX 400. Historically, US bear markets of this degree have taken between 23 months and 60 months to unfold. It took only 17 months for the bear market to hit the Mar 09 low. In addition to time there is the OEW wave structure. All bear markets unfold in three waves, not fives. Bear markets are the corrections to previous five wave bull markets. The depth of the bear market correction depends upon the degree of the bull market it is correcting. In our present situation this bear market is correcting the Supercycle bull market from 1932-2007. During the first 17 months of this bear market we counted a complete zigzag from SPX 1576 to 667, a 58% decline. We labeled this as Primary wave A, with the following Major waves defining the zigzag: Mar 08 SPX 1257, May 08 SPX 1440, and Mar 09 SPX 667. Within a few days of the SPX 667 low we projected the kickoff of Primary wave B. Historically these types of counter-trend bear market rallies last for about five months, and either rally 50% off the lows, or, retrace 50% of the entire bear market decline. This projected a rally from SPX 667 to either SPX 1001 (50% rally) or SPX 1122 (50% retracement). Thus far the uptrend from March has made a high of SPX 956, a 43% rally off the lows. This is already fairly close to what we have observed, historically, for Primary wave B counter-trend rallies. And, it provides an excellent selling, or hedging, opportunity for those still holding, or committed to holding, stocks. When Primary wave C is confirmed, the second leg down of the bear market will be underway. MEDIUM TERM: uptrend may have topped From the SPX 667 March 6th low we can count a potentially completed zigzag into the SPX 956 June 11th high. When labeling this as Primary wave B, we can count a five wave rally into the late March SPX 833 high as Major wave A. Then a pullback to SPX 780 for Major wave B. This is then followed by a more extended five wave Major C: wave 1 SPX 876, wave 2 SPX 827, wave 3 SPX 930, wave 4 SPX 879, and wave 5 SPX 956. Notice that Major wave C unfolded in a classic EW pattern. Wave 3 (103 points) was the longest, wave 5 (77 points) the shortest, and wave 4 (flat) alternated with wave 2 (zigzag). Also note that Major wave C (176 points) was similar in length to Major wave A (166 points). The technical indicators we follow also support this potential Primary wave B top scenario. At the highs there were negative RSI divergences on all timeframes. Plus this is the first weekly negative divergence since May 2008, and the most overbought monthly condition since May 2008 as well. Lastly the SPX 956 high hit the long term OEW pivot at 961. Everything is pointing to a potential Primary wave B top. We are, however, maintaining an alternate count on the DOW charts. This alternate count suggests that a downtrend could be followed by another uptrend to complete Primary wave B a couple of months from now. The structure of the downtrend, when confirmed, will determine which count is actually underway. Nevertheless, after a 43% rally in just three months the risk/reward ratio favors hedging or exiting the equity market. SHORT TERM Support for the SPX remains at 912 and then 848, with resistance at 935 and then 961. Short term momentum was oversold at wednesday's low (SPX 904), overbought at friday's high (SPX 927), and is now heading lower. Thus far, the decline from SPX 956 appears to be impulsive. This small wave down, we have labeled Minor wave 1 unfolded as follows: 936, 946, 920, 928, 904. The small rally from that low appears to be Minor wave 2 and has unfolded as: 918, 909, 927 so far. The OEW pivot at 935 remains an important resistance area. Should the market break through this pivot to the upside the uptrend could be extending. As long as the market stays below this pivot the potential downtrend remains in force. On the downside, a break below the 904 low would suggest a resumption of the selling pressure, and a drop below the SPX 876 level would likely confirm the downtrend. As long as the SPX 935 OEW pivot holds we're expecting a downtrend. FOREIGN MARKETS The Asian markets lost 2.5% on the week with only China showing a gain. Most of these indices are displaying negative RSI divergences at extremely overbought longer term levels. The European markets were -3.4% on the week. The leader, Germany's DAX, continues to lag the FTSE. The Commodity equity markets were -3.6% on the week. Both Canada and Brazil are displaying negative RSI divergences on the daily and weekly charts. COMMODITIES Bonds were flat on the week, and this bear market will likely last for quite some time. However, we have positive RSI divergences forming in Bond prices and they are due for a rally soon. Crude was -3.8% on the week, and displays a negative RSI divergence from an overbought condition. Expecting a downtrend. Gold was -0.5% on the week. The pullback from the $990 high has been orderly with support around the $915 level. The Euro (-0.6%) continues to pullback, the USD (+0.1%) continues to rally and the Yen (+2.2%) is rallying now as well. Expecting the USD to top in early July (82+) which should coincide with a Euro bottom. NEXT WEEK The most important event(s) on the calendar this week is the FED's FOMC meeting on tuesday/wednesday, and FED chairman Bernanke's testimony before the Congress about the acquistion of Merrill Lynch by Bank of America. There has already been testimony by Ken Lewis, the CEO of BAC, suggesting coersion by the FED chairman and the then Treasury secretary Paulson. With HR 1207, the Federal Reserve Transparency Act of 2009 (audit the FED), already receiving 232 cosponsors. Every word of the FED chairman's testimony is likely to receive a lot of attention by the Congress, investors and the public. On the economic front, the week also starts on tuesday with Existing home sales and FHFA home prices. Wednesday we have Durables goods and New homes sales. On thursday the weekly Jobless claims and the nearly final revision to Q1 GDP. Then on friday Personal income, Consumer spending, PCE and the UoM Consumer sentiment reading. Best to your week!
(20min delay)