The SPX declined -3.8% in 5 days from the 4/11 1597.35 high to the 1536.03 low last Thursday. There was Fib Time Ratio symmetry on 4/12/13 measured from the 4/2/12 and 9/14/12 highs [1422.38-1474.51], and the market was extremely O/B on a momentum and sentiment base in all-time periods. The SPX had also taken out the 1576.07 10/11/07 bull market high, so the anticipated market emotion was satisfied; all of which made for a lousy risk/reward ratio coming into last week.
The 1536.03 intraday low last week took out the previous two trading range lows at 1538.57 and 1539.50, in addition to the 1541 50DEMA at the time, but the SPX bounced off that support Friday and was +0.9% to 1555.29 so the Fed`s trading desk in NY did a good job at getting the index to close above support. The 50DEMA went out at 1541.84 and the 3 month EMA is 1541.66.
The SPX made moves of -2.3%, +1.4%, -1.4%, -0.7%, and +0.9% last week with multiple 2.0 and 3.0 extended moves in the major indexes, ETFs, and many SPX 500 component stocks. The universe of SPX 500 stocks leading the upside has narrowed considerably, and the extreme weakness in the commodity sectors reflects the shrinking global economy, which is now more evident by the day in the U.S. to all but the political diehards.
The “herd” keeps chasing the consumer durables [XLP] as you can see on the chart below, while last week the IWM and BKX made lower lows and took out their 50DEMA`s . The GDX, GLD, and XME are extended below their 200DEMA`s as they are “Below-the-Line” stocks, while the energy sector ETFs have declined to their 200DEMA zones.
The most significant timing symmetry is in June and the 1st week in August. If the Fed manipulates the SPX higher into those time periods [probably will] resulting in a longer term and intermediate O/B condition, in addition to the completion of that highly significant monthly RST pattern that was posted in the previous commentary, then the odds strongly favor a significant bear cycle decline.
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