SPX is a good hybrid between the DJI and Nasdaq and all three are moving up in counter-trend rallies of their respective prior legs down. This chart sets out SPX's pattern, but it a good roadmap for the market as a whole. I don't know when or at what level this so called rally is going to end, but I do know what key level will signal its termination. This chart allows for further rally to the 50% and then 61.8% retracement levels (as wave ii), as unlikely it is that price will reach that high, patterns allow it. Losing last Friday's point gain will be our trigger for new short positions, and where the market may go before that loss is inconsequential to where it is going on the next leg down. If price does reach the 61.8% retracement level, we may have an aggressive early entry for mega profits. Otherwise, keep an eye on the key levels below last week's lows. IWM - "Ditto" This IWM chart is eerily identical in form and substance to the SPX chart above, adding weight to the premise of a counter-trend rally and its ultimate demise. Key day: Thursday: CPI numbers.
