12/22/20089:26 PM Pacific

OK, the turn part worked. Here is a daily chart updating the regression trend channel of the $SPX from a few days ago. The pocket created by the intersection is right where price stopped, keeping the breakout of the down slope intact and probably confirming the breakout. It is normal following a breakout for price to “throwback” to re-test the prior resistance level, and today, the throwback held on several levels. In addition to the regression channel breakout, the 3rd Fan line I have been showing you held.

A turn up here will also confirm that the move down was corrective (1:1 ratio). This matters, because while I don’t think we are in a motive wave going up, I don’t think we are in a motive wave going down either. In other words, we have not resumed the down trend and we are still in an upward unfolding corrective combination pattern. Looking at a shorter-term chart (233 min) of the cash index and the regression trend channel it is interesting to note that there is a once again a Fibonacci .618 extension

12/22/20089:26 PM Pacific

confluence (up from 750 and 820) at 915 resistance zone that also aligns with regression line. This of course matches the resistance zone from the chart of the e-mini futures last night, but it also highlights a better target beyond that level, and that is the top of the channel that aligns with a 1:1 ratio extension of the entire A-B-C move up from the low. 952 is still a resistance level, but ideally price will get to the top of the channel. This would be a sign of strength hinting at even higher prices to come.

The downside risk is of course that this breakout is immediately tested again and doesn’t hold (and I think it would be immediate if it is going to happen). A subsequent move below today’s low would negate this thesis. A break below 850 targets 830 for a bounce. TMD/DW The market detective provides personal market opinion based on sound technical analysis and research. However, no warranty is given or implied as to its true reliability. The market detective will make errors and mistakes. The market detective is not an investment adviser and is not making recommendations to buy, sell, or place orders relating to the futures contracts, ETFs, or stocks that he writes about. The responsibility for decisions made from information contained in this service are solely that of the individual subscriber. The individual must fully research and make his/her own decisions before acting on any information provided by the market detective. The market detective assumes no responsibility for subscriber investment or trading results.