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Thursday, December 9, 2010

SPX update

As expected financials are the top performing sector leading this leg up as the SPX has produced a daily 11 count - leaving at least 1 more higher close to go max. 2 towards 1240-50 before a mini correction will start. At the same time if we can manage to close above 1225 on a weekly basis we will produce an 11 weekly count - carrying on from April highs. Which adds to my assumption that early Jan we are poised to make a bigger top count which should trigger at least a 10% drop but 15% is rather the call. Ironically the sell off in bonds do confirm that a down-move is imminent as we are in a green 8 weekly count down and 9 counts have a very high correlation with counter-moves. What I am saying is that the bond markets have come to a point there they will drag stocks down at some point but from a technical point they signal that a drop in stocks will trigger some save heaven buying as they are within this weekly 8 count below the weekly Bollinger which produces usually a bounce. What makes this a save assumption is the fact that the BUND ( the German equivalent) is in the same situation. SPX will drop back from the 1240-50 level to 1200-10, extreme would be another test of the 1175 level before rising again.

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