I was asked yesterday why I'm thinking the 1440 SPX area might well be a major high rather than a retracement on the road to test the 2007 highs. From a TA perspective both are definitely valid options, and I would go so far as to say that in all likelihood we will do one or the other. I covered both options in my weekend post before last and you can see that post here.
There are a few technical reasons why I'm leaning towards thinking this is a major double-top being formed and they are as follows:
1. There are major topping patterns formed and very much still in play on copper, EEM and many other indices. These need to be borne in mind and make downside risk here unusually high.
2. SPX highs tend to be at tests of important previous support or resistance levels, and the April 2012 high wasn't. This has me thinking that the April high was part of a topping pattern rather than a significant interim high in its own right.
3. The huge Dow Theory divergence between Dow and TRAN here is characteristic of major tops.
4. There is a very nice setup of negative RSI divergence on the weekly chart, and there is also a decent resistance trendline that is a few points above the 1440 area SPX pivot
