Surprise, surprise

S&P 500. It’s true we reckoned with one to three days of duration of the expected course of the correction after the last significant high of 07/19 -

Source: http://www.gunner24.com/newsletter-archive/july-2012/22072012/

and the release button that was responsible for the end of the correction – AAPL figures -

Source: http://www.gunner24.com/newsletter-archive/july-2012/22072012/

as well as the subsequent possibility of the 07/19 top to overshoot until 07/27, but now there’s a big problem with the considered short-entry!

The fact that the market indeed performed a visible volume increase but did NOT turn down intraday on Friday – on the contrary, Friday as well as the week ended at the highs triggered another GUNNER24 Buy Signal. Furthermore the S&P 500 closed above 1380 points on Friday thus activating the 1392 being the next daily target.

And:

The 1392 (should be worked off on Monday) are supposed to be another interim top, and – as also suggested in the last issue already – technically the market cannot turn down significantly before 1402 now!

Since the market closed at the highs on Friday a very significant weekly GUNNER24 Resistance Diagonal was taken. Therewith the lower line of the 2nd double arc at 1402 (the week after next) was activated as the up target. In case the S&P 500 wants to reach the lower line of the 2nd (will pass at 1404 next week) as early as next week in its exhaustion move we’ll go short there with a weekly position. Market if touched. Target for the shorts are 1290.

In the weekly 5 Candle GUNNER24 Up we don’t only see that the resistance diagonal was broken for the first time since more than 4 months but we also make out the importance of the 1*1 Gann Angle, because that’s where a strong weekly support began to work repeatedly being the new energetic rebound from the 1*1 angle the trigger for the final break of the diagonal.

Correspondingly, the most important support for next week will be 1342 at the 1*1 Gann Angle. But also the diagonal is expected to produce strong support for next week – at 1360 – for its physical state has changed, from resistance to support. That’s why I consider a step back to 1360 as a very good entry level for the expected exhaustion to 1402:

Here’s the daily 8 Candle GUNNER24 Up. As expected, the market nose dived from 1380.39 top. The correction back to the horizontal support, the upper line of the first square at 1329 came in very low. It’s astonishing that even the 1*1 on closing price basis was clearly broken downwards in this correction. But even more astonishing is the performance of the last two days.

Not only the important 1*1 was clearly re-conquered, but also the break of the 2nd double arc succeeded pretty unambiguously. It would have taken the upper line of the 2nd to resist at 1370 and even ring in a reversal on Friday to set an obvious short signal. But the fact that the market closed that clearly above the 2nd is a buy signal of first class quality. Target now is the 3rd double arc – 1402 within 10 trading days.

Because of its most overbought situation in the short term, the market MAY fall again from the horizontal resistance at 1392 down to the 1*1 angle and a little lower now. Technically the 2nd double arc is expected to be tested back, resisting. That’s why we’ll set a cadger limit at the combined weekly (weekly diagonal) and daily 1360 support with target 1402. SL is a daily close below 1329.

But there’s still a chance that the market will continue its extremely strong performance of the last two days but extending at 1404-1402 on Monday or maybe Tuesday, then turning rapidly downwards from there. That’s the reason for our weekly short at this level.

The daily setup above is also putting out this resistance area at the intersection point of the upper line of the 2nd with the beginning of the setup. The same price resistance always becomes important and significant if it’s to be seen in some different setups and time frames. In such a constellation there’s always the threat of a sharp turn!

How choppy this up move is performing by and large is clarified by the following mirror technique. This way of seeing would even allow a low down leg from the 1392 down to the weekly 1*1 Gann Angle that will pass at 1342 next week you know, before the 1400 might be attacked: