A little longer term perspective from a buddy of mine . . .
" - - - This suggests then that once that is current pattern is completed that a resumption of the uptrend will unfold with two basic probabilities.
The length of the rally that has unfolded since the lows in March at the 12a56.98 level and the recent high of 1422.78 level rounding to nearest whole number was 166 S & P points. The next two sequences should be a minor b-wave down and c-wave up. The characteristics indicate a decline of 33 to 38 percent retracement of the rally from 1256 to 1422 level to likely to occur. This suggests a downward target range of 1369.10/1361.40 levels will unfold. There were several other variables that were considered, but these levels have the highest probability to be the low of this downward b-wave sequence.
The next event will be an upward c-wave. The calculation for this sequence suggest that the length of and duration of the c-wave sequence will be similar or equal to the first sequence(a-wave) of 8 weeks and 166 points in length. So, measuring from the projected downward target of 1361.40 level and adding the length of the first a-wave (166 points) will project a target price of 1532 and this will be the extreme allowed in the pattern and still remain a B-wave.
The second probability for this sequence is that it will be .618 percent of the length of the a-wave or 102 S & P points. This would suggest a rally toward the 1464/1468 range. As you may recall, the 1453/1468 levels represent a 50 to 61 percent retracement of the decline from 1576 to 1251. In bear market (which we are in) this is a typical rally before the next big downward leg begins. These types of patterns occurred in the 1929,1962,1966,1969,1974,1987 and 2000. There should be no difference in this sequence. As far as the duration of this pattern, this next sequence is likely to unfold over the next 8 to 12 weeks. So expect a sloppy volatile trading range for the next several weeks then a sharp upward rally to unfold from there.
