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So, where are we at with the gold miners analog?
Well, so far, the analog has been working amazingly well (for months, actually), and I'm going to suppose we're in about mid-August 2008. Here are the past and present charts.
On a percentage basis, we fell almost exactly the same amount as in 2008, and if the analog continues to hold, we've got a bit of a bounce in the offing. Once that bounce is over – – again, assuming the analog holds – – a more severe drop is just around the corner. I've put an arrow at the spot that I think we are approximately located right now.
There have been two main schools of thought on the bull side over the last few weeks, and the first expected that this retracement would be shortish, and would be followed by a wave 5 move to take equities to new highs and an interim top before a much bigger summer retracement. The second have been expecting a much bigger retracement now, probably taking us through May and slightly beyond, before a big renewed push up in the summer. We are most likely at the point of decision between those two scenarios now. A break up should deliver the first scenario and a break down may well deliver the second. I should stress that I've not entirely discounted alternative bear scenarios, but unless we see a clear topping pattern followed through to below the 1292 SPX October high, it's not worth spending much time on these IMO.
As I suggested was likely yesterday morning, SPX pushed up to test the highlighted strong resistance area and the last bounce high, and has reversed there so far. A break over 1396 will trigger a double bottom (and arguably IHS) target over the last high and the obvious next target not far above there is the 1442 pivot level. Short term there is significant negative divergence on the 15min RSI and that is a strong signal for reversal UNLESS we have started a new impulse wave up. If we see weakness today I'm seeing strong support in the 1377 area, and a move below there would weaken the bullish scenario here:
OK, it's a new day, and it's light-bulb-over-my-head time!
For weeks now, I've been confounded at how I've had to keep inching up the horizontal line that delineates support & resistance on the ES. This line has been around 1390, but I had to keep monkeying around with it to make it legitimate. And monkeying around with anything means it's not legitimate.
After last night's umpteenth instance of going a little higher than before, the ES finally made its path plain to me. It's not a horizontal line at all, but a moderately ascending line, that defines this resistance. Thus:
I feel better now. And, after all is said and done, that's why we're all here, isn't it?