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Today brought evidence we should expect weakness of the impending kind. Before we get to that, though, let's look a little further ahead...
If mid-November 2012 RSI and MACD lows are taken out over coming weeks, then there's a greater chance last month's S&P 500 peak will not be exceeded again in 2013. (See green line drawn in upper and lower panels)
Yet if the market decidedly turns higher prior to RSI and MACD falling below respective November 2012 lows, we more likely will see the S&P 500 rocket higher in a way similar to (and likely harmonious with) its advances during the first half of September 2012, and then again from mid-April to May peak. Indeed, technical tendencies accompanying the S&P 500's advance since early-June 2012 bottom leave us to conclude this alternative no slight probability in fact (see red lines drawn in upper and lower panels).
Either way the wind blows over the coming course of the current, unfinished pullback, the market from an Elliott perspective is seen topping here, and quite possibly ending its advance off March '09 bottom, as well. For all we know May's peak could mark top. Indeed, were the S&P to fall below its mid-September 2012 peak, then "May 2013 top" might become as commonly referenced here as March 2009 bottom has been.
Here and now, momentum's strong fade (see bottom panel) is made only the more fearsome by the fact its same fade vis-a-vis the NYSE Composite index has taken that index's momentum negative, while the more speculative NASDAQ finds its momentum rather more blissfully aloft. This sets up for heartbreak. Unjustified is greater faith in a NASDAQ still lagging the S&P 500's relative performance. The NYSE's momentum dive decidedly to the negative raises odds, then, the market's current pullback will be more pronounced than any so far this year.
In fact technicals at intra-day levels suggest the S&P 500's 50-day moving average is imminently in peril of being breached to the negative...
Come late-day Monday it was clear the market likely was poising to strongly move in either direction, this by way of technical conditions at various intra-day intervals. (I was leaning positive.)
Yesterday proved a disaster. The strong push out of the gate revealed an urgency objectively measured above by MACD (momentum) for its relatively heightened intensity. "Someone" wanted o-u-t and took it to the close.
No strength was displayed today, either. What might appear positive technical divergences as the S&P sank lower throughout the day are twice belied: with no positive indication of developing long interest the S&P 500's relative strength and momentum remained decidedly to the negative. We see this very clearly at 5-minute intervals...
"It takes buying to put [prices] up." We saw none today following an opening attempt at a CME goose. Today brought only more weakness. "Someone" still wants o-u-t. There is a good chance the S&P 500's 50-day moving average is about to succumb.
* * * * *© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
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