Obviously I've been posting a lot of seriously bearish looking long term charts in recent weeks, and I should take a moment just to emphasize that I don't think that it's time yet to buy in a large supply of ammunition and baked beans and head for the high ground in preparation for the end of the world as we know it. What I am saying is that these setups need to be borne in mind as part of the overall technical mix, and that these patterns being at a late stage of development, at a time when we are looking at the potential for the forced breakup of the eurozone and a string of possible sovereign defaults, is definitely something to think about. I'll be posting some more of these charts today looking at US equity indices. 

Short term however we have a distinctly bullish looking setup developing on SPX after the deep retracement from Tuesday's high. Obviously the declining channel from the high was broken on Tuesday, which was bullish. The deep retracement after Tuesday's high to establish a higher low has then set up a possible W bottom, which has a target in the 1365 area on a break over Tuesday's high at 1328.49. This setup also looks classically like a first wave up, followed by a deeply retracing wave 2, and that would put us currently in a wave 3 up so we'll see how that develops. There are a couple of other comments to add about this however. 

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