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SPX Update: Will Bears Capitalize?


Bears have the opportunity to shift the momentum.

Tomorrow's article is going to be titled "The Trouble with Bubbles," and will be a bit longer on words, so today's article is going to focus more on charts. Of course, I'm assuming I won't die of exhaustion between now and then -- if I don't make it through 'til tomorrow, then that article will probably be really short.

Yesterday's near-term ending diagonal count appears to have been correct, although it ended a bit abruptly, about 4 points shy of the exact "perfect world" target, and the S&P 500 (INDEXSP:.INX) declined directly off the open. With yesterday's decline, bears have a good opportunity to shift the momentum, and have a defensible position at the 1600 zone -- now they have to continue to run with it.

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If my intermediate thesis is correct, then we appear to be wrapping up multiple degrees of fifth waves, which should be followed by the first lasting correction of 2013. It's too early to paint targets with anything but broad strokes -- in fact, to be fair, it's too early to confirm an intermediate correction has started at all. This is unabashed analytical front-running, and the bullish option is that this fifth wave is sub-dividing into a larger five-wave structure, which would mean we've only seen wave i of v so far (shown in black). I'm continuing to favor the more bearish intermediate view at present.

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