S&P Current roadmap location July 22nd

On July 7th I indicated the next possible date for SPY top, based on our secondary count, would be July 19th or 45 days from the ending 1st wave low.

The SPY index exhausted higher into Fib 13th date July 19th, 45 days from Wave one low, followed by a distribution on July 20th.

Traders should use my updates to look for price and time dates before entering trading positions. These time frames offer the highest probability of winning trades.

For example, after reading my update on July 7th, you would know to wait for the next Fib sequence date, July 19th, and 45 days from Wave one low, to take a short position with a protective stop above $140, our price target for July 19th.

The next few charts continue to build a case for a probable top using the same 45 day pattern from the EW1 low.

We have five clear sub-waves higher:

The 45 day from the low pattern is also showing three thrust higher:

The 45 day pattern once again has formed a Bearish Kicking Pattern:

Conclusion:

SPY has moved 45 days from the June low, ending on Fib 13th date of July 19th.

SPY has 5 countable sub waves up from the June low, three exhaustion thrust into highs, and a Bearish Kicking pattern.

We do not have a squaring of price and time and the index has been able to ignore all bad news to date.

The FED meets August 1st, they will not do QE3 as I have been saying for months now. I will update direction, price and time after the Fed meeting.

Tim Kathlina

S&P JULY COUNT PROBABILITIES JULY 7TH

In early June I indicated June 19th to be FIB day 21, a day of potential significance for a high or low.

Reviewing price action into this date on June 25th: based on heavy selling, over bought RSI<2>, over bought Stochastic and 61% retrace of the low, a higher probability was favored for this being a ending sub wave; expecting the next significant date or time to bring in Wave 1 completion. (Remember, I do not favor a count with WAVE1 already completed.)

I indicated a secondary probability of the index exhausting into a high on the next significant date or time. The next significant date or time was noted as July 1st thru 10th, or 90 days from the yearly high.

Turns out, Fib 21 day was a bear trap. Despite no reason for the market to push higher and every other tradeable asset class reacting as expected to the bearish reality, the stock market pulled another rabbit out of the hat. With this in mind, we need to explore the secondary count probabilities.

The secondary count assumes EW1 completed at the 200 day moving average.

Starting a FIB count at the 200 day low point, FIB day 5 brought in selling; FIB day 8-just hit, again bringing in selling.

EW theory does not allow for sub wave 3 to be the shortest wave. If FIB day 5 was the completion of sub wave 1, then it is likely that sub wave 3 will complete on July 19-20th, FIB day 13; 1.61xs sub wave one, or 1400 S&P.

Because major wave 2 can not retrace all of major wave 1, sub wave 5 would then need to be truncated or not exceed sub wave 3. The large retracements that we have seen is another reason I favor the primary count.

Notice in the secondary count, sub wave ii of major EW1, retraces almost all the way back to the April high and sub wave iv does not overlap any of sub wave ii. These are strong indications that this count is wrong.

The next chart is my preferred EW count. This one is easy to read and understand. SPY has a megaphone downtrend pattern for EW1. SPY exhausted higher into FIB day 8 to complete sub wave iv. Now we expect a pull back to our previously defined target of 1220 range to complete EW1.

The next two charts give us some technical indicators to watch that will clarify which count, primary or secondary the market is in. The third option is a massive bull market and both counts are wrong.

Two common candlestick patterns are bullish and bearish kickers. A bullish kicker will have three red lower low candle patterns in a row and the fourth day kicking higher-a bear trap. The bearish kicker is the opposite, three white candle patterns with a break lower on the 4th day and follow thru-bull trap.

The important thing to note is all patterns in technical analysis are only as valid as the trend they are in. In other words, if the trend is higher, and the market shows a head n shoulders, the pattern will fail. If the market trend is lower, the head n shoulders pattern will work. (This is an omission that many miss in technical writing attempts)

The SPY chart shows both bullish and bearish kickers in the uptrend leading up to the April high. Note that the Bearish Kicker was denied by the market moving higher, again a bear trap. The Bullish Kicker was very profitable to longs as the weak hands got shaken out, given bulls a lower, thus more profitable entry point.

The Bullish Kicker worked, because the larger trend was higher.

The point of all this is the SPY has a bear kicker into the 90 day from the high window on FIB day 8. If we are in major wave 2, then this Bear Kicker will be a Bear trap and we can expect the market to move higher into the July 19-20th, FIB day 13, price target of 1400 S&P.

If my preferred count is correct, then the Bear Kicker will be valid-moving the index lower to complete EW1.

The next chart reveals longs are profitable at SPY 132. Secondary count Wave 2 would allow the market to test this area, then bounce up to complete sub wave iii at 1400 around July 19th-20th.

If my primary count is correct, SPY will break below 132 after a small bounce test, sending bulls into panic selling mode; bringing in the completion of major wave one about 80-100 S&P points lower.

The third option is while ROME burns, we all play fiddle and watch the S&P soar to all time highs, 100xs earnings p/e, along with $100 per gallon of gas, $1000 oil and $50,000 per share Apple.

Tim Kathlina