Based on the COT action, bulls/bears reduced some risk as we can see that we have lower open interest... waiting for next move.
The COT action clearly indicates small and large speculators are on short side. Of course, we all knew that large speculators are bearish all along while small speculators are just switched their positions, in my guessing, because daily price actions are now nearing OB.
Again, it will be interesting week, but we know, when the bird starts to fly, big fishes will be fried.
SPX is 25 points away from Breaking out of LT resistance. It tested SPX 1555 breakout for 6 trading days in July before 7/19 correction started.
At that time, I commented that the breakout of SPX 1550 will not succeed because markets were overbought coming from Jun-Jul 2006 bottom with negative divergences on daily and weekly price and breadth actions. I noted that we will have a ST correction which we have seen during 7/19-8/16 with 12% H/L correction.
After the correction, we now have price action and breadth coming off from IT bottom as we have Weekly price action is just turning positive, e.g. macd.
A breakout from SPX 1555 will carry through measured target of 1600, then 1650 as shown below on the LT targets.
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SPX Target 1650
Global Economy: SPX Breakout Target 1650
SPX breakout from 1555 is targeting SPX 1650. Breaking out of SPX 1555 in our global economy is reasonable as we are coming off major IT breadth bottom with positive divergence in Aug 2007.
Major Market Cycle Bottoms in Oct 2002. Market has risen 420% since 1975 bottom, 200% since 1982 before it corrected 35% in 1987.
SPX has corrected 50% of 1980-2000 rally during 2000-2002 which is a significant correction.Breaking out of SPX 1555 in our global economy is reasonable as we are coming off major IT breadth bottom with positive divergence in Aug 2007.
http://www.stockcharts.com/c-sc/sc?s=$SPX&p=M&st=1982-01-01&en=2007-12-31&i=p49901538714&a=115646387&r=219.png
http://www.stockcharts.com/c-sc/sc?s=$SPX&p=M&yr=8&mn=6&dy=0&i=p79217076829&a=115792957&r=363.png
Nasdaq closed at 2701.50 which is a new monthly high even though it didn't trade above 2725.
It corrected 12% H/L during 7/19-8/16 correction and is now coming off from IT bottom with weekly price momentum turning positive.
Breaking above 2725 as SPX breaks above 1555 targeting 3131.
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NASDAQ Target 3131:
Breakout from Jan 2004 to 50% retracement of Mar 2000 5132.52 - Oct 2002 is targeting Nasdaq 3000 +/- which is 50% RT of the correction.
The Jul 2007 top 2724 is 38% RT of the Mar 2000 – Oct 2002 1108.49 correction, and now Nasdaq is bounced off from the Mar 2007 2531.42 top breakout support.
The Jan 2005 break out from Jan 2004 top 2152.12 is failed, however, it again attempted the breakout 2219.91 in Aug 2005. However, it is again failed the second attempt; nevertheless, it formed higher/high price actions which subsequently traded to 2375.45 Apr 2006 top followed by Apr-Jul 2006 correction.
Price actions during Jan 2004 – Apr 2006 is a consolidation period of Feb 2003 – Jan 2004 price actions.
The Jan 2005 breakout attempt which was subsequently succeeded is targeting Nasdaq 3155 +/-. The Jan 2005 breakout attempt is technically consistent with “initial breakout attempt” is usually resolved in actual breakout.
Aug 2007 bottoming process with Mar 2007 low breakout support is consistent with the technical price pattern which a series of breakouts with higher/high price actions targeting 3155 +/- from Jan 2004 breakout.
http://www.stockcharts.com/c-sc/sc?s=$COMPQ&p=M&st=1995-01-01&en=2007-12-31&i=p37991314951&a=88255139&r=659.png
http://www.stockcharts.com/c-sc/sc?s=$COMPQ&p=M&yr=5&mn=10&dy=0&i=p80777978966&a=115744406&r=317.png
http://www.stockcharts.com/c-sc/sc?s=$COMPQ&p=M&yr=5&mn=10&dy=0&i=p80777978966&a=115744406&r=317.png
