I have just been doing some annotation on the SPX weekly chart for interest sake. This is just to show where I think the S&P 500 is in relation to where it was when the first sign of the GFC started to appear in mid 2007. I am not saying we are going to get a repeat of that pattern. I am just saying that this is a much higher risk level than most people realise. Don't panic, we need to see how this unfolds. My target would be just above 1600 on a retrace which could take until May this year to play out. The market could rally from there after a retrace. I don't know. These below are the main points.
I am watching for.
- A double top followed by a lower high.
- A cross of the 15 and 35 MA below the 50 MA.
- A break of that major long term uptrend line. (the thin black line)
- A bearish cross back down on the CCI indicator from red where it is now like you can see in the last week of 2007.
- A retrace back to just above 1600
- A change from an up trending RSI to a down trending RSI.
Keep in mind that if this happens at all, it could take six months to unfold. There are so many factors that could come into play that I just can not say for sure how this will play out. What I am saying is that I believe we are now at the same point as the red arrow that I marked on the chart in mid 07. I am just saying be aware and be prepared. This is just my opinion, not intended as trading advice.
Click on chart to enlarge
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