On Monday, the S&P impulsed after hooking the Street with an up open that quickly reversed red, but just as quickly triggered a reverse ORB up through the upside of the morning range following a first-hour low.

Apple (AAPL), for example, was prototypical of the price action, grabbing stops upon flushing out below its 50-period moving average on the hourly chart, but exploding after recapturing that moving average.



AAPL’s short-term (hourly) chart carved out an inverse head-and-shoulders pattern, which projects to approximately 144.50, the level of the closing high from June 5 -- and, not so coincidentally, a whisker away from the 145 strike. AAPL knifed right through its 20-day moving average, and -- so as long as it holds above it -- the stock is back in a strong position.

Goldman Sachs (GS) released earnings before the open, easily surpassing expectations. This should lead sentiment around by the nose. GS has traced out a more or less sideways line formation since early June, and is poised to pop over the top of the line given today’s large range.

Typically, momentum precedes price; however, because GS is up 100% off its March low, it's possible that good earnings will be greeted with selling. A breakout over 150 that sees price reverse over the next few days -- and a stab back into the line formation that sticks -- may indicate a boomerang sell pattern, or what's sometimes referred to as a specialist trap pattern could be playing out. This occurs when a stock that's had a big move and consolidated in a flat breaks out with the promise of a new leg -- but comes back in quickly.

As the 10-minute chart of the S&P shown in last night’s report depicts, when the index recaptured the 888 pivot (prior lows and highs) it never looked back and the promise of a Reverse ORB (a break through the top of the first half hours range after a false break through the bottom of the first half hour’s range) for a trend day was satisfied.

The real test, short term, for the S&P will be near the level where it closed, which coincides with the gap down from last Monday near 903. Note the live angle and the top of an hourly channel (shown in the hourly chart in last night’s report) that comes in near 903/905.

That suggests we need to be aware of the possibility of an up open/first hour high near those levels: a pause day after today’s large range would not be atypical -- especially with the S&P making a line drive to the underbelly of its 20- and 50-day moving averages.

Specifically, the 50-dma comes in at 911 or the 91 Spyder -- where, as offered above, I suspect the greatest number of premiums can be collected by the option expiration arbs. The 200 period moving average of the S&P is rolling over, and should coincide with 910 in front of expiration.

The market truly seems to "know" this 910 number. In fact, the range of the bear market is 910 S&P points -- 1576 to 666.

The S&P could pull back to 885/888 without doing any damage. But I would not, definitely not, be buying any move back below 870 at this stage of the game. Moreover, during what I think is this final phase or last ditch, I wouldn't buy anything that's moving down.

Conclusion: If the S&P meaningfully regains 910, it's theoretically possible that a melt-up move into the end of the week is on. But I’ll believe that when I see it.

Yesterday, I showed the setup for another leg to 980-1020. However, cyclically speaking, I think the timeframe for the market to advance from here runs out after the first week of August, and quite possibly as early as the end of this week. At the outside that gives stocks precious little time to satisfy such objectives. Not impossible, but is it likely?

Either way, the market is poised to give up one-third to one-half to two-thirds of the advance from March into October as I see it. A one-third retrace equals 859/860. A one-half retrace equals 811-ish. A two-thirds retrace equates to 762-ish.

The last level is symmetrically satisfying. Why? 768 is the level of the October 2002 bear-market low. This is near the November 2008 low (741), and would carve out an inverse right shoulder. It's interesting that September 9, 2009 "vibrates" off 747. This date is opposite or 180 degrees from the March 6 low, and near the one-year anniversary of the day that shook the world last year -- September 15.

September 9, 2009 is also approximately 90 days from the June high. The S&P advanced 290 points off the March low. If the S&P should decline to near 747, a measured move of another 290 points gives 1037 --or near the 1007/1020 idealized three-eighths retracement of the bear market.

666 and September 9, 2009 -- a parallel universe?