If The Past Can

then this is my ST fearless forecast of where the market is going over the 4-6 trading days using the Russell 2000 as the proxy. Since the reactive move off the Nov. low the market appears to have settled into a rising channel of higher lows and higher highs. Call it a bear flag if you want....call it a corrective, measured move higher...doesn't matter the name, if it plays out the way I see it, it's tradeable for a ST swing trade back to the top of the channel. (1 chart)

U.F.O.

Sooner or later the index will break through the channel. The question is "Will that happen at the top of the channel or the bottom?" My model is still indicating a lower market next week. Rich

So true Rich. The last leg of the crash going into the recent low (11/4-11/21) was so well defined that it didn't surprise me to expect some kind of Fibonacci retracement of that range on a correction. What did surprise me was the uptrend channel blowing through 62%, where it supported Friday after hitting levels in the low 80% retracement range. Since 62% was violated so efficiently, I think we're likely to see a 100% retracement of the 11/04-11/21 death throe range before any low retest. That's where I think we might see that channel breakout to the downside, just afterwards. (1 chart)

U.F.O.

If this theory is correct, it would equate to $SPX retesting $1,007.51 before any low retest. This is what markets do...they seek out and challenge support and resistance levels. We found initial support on 11/21. The next logical step would be on a correction for the market to test key resistance, which on $SPX stands like a glowing beacon at $1,007.51. (1 chart)

U.F.O.

I agree on the bounce for this week. I don't think we have more than another 2 maybe 3 weeks before heading to test the lows. NYSI looks close to turning now.

We can call it "The Obama Rally". I think the market will put on it's best face going into the inauguration.

U.F.O.