We got some price stabilization right at our first support level below, which coincides with the 38% retracement of the current bull market from the March 2009 lows. So what happens next?
Well my model calls for another wave down likely to complete the Domed House pattern of the Three Peaks and a Domed House for you George Lindsay followers out there. I expect prices to continue to rally back into the 1230 - 1270 area over the next couple of weeks or so, with a slight chance of even returning to 1290. From there I expect another drop, the question is how big will the drop be?
Well I believe it will basically match the size in length of our last drop from the May highs to recent lows, that created approximately a 270 pt S+P 500 drop to our support level. Using these numbers going forward I would expect a similar drop to possibly take us below the 1000 level on the S+P depending on where the high is put in.
Again refer to the previous post as the 935 final support level will be key to keeping the bull market structure intact. Hypothetically as long as that level doesn't get violated to the downside, the potential is always there for price stabilization and new bull market highs eventually made maybe as soon as next year.
But as always trade safely and stay well hedged, I can not emphasize this enough!