As said in my earlier article, the odds are good that we will re-visit SPX 1240 area being 38% bounce. The hourly is very oversold and a bounce is imminent.
A possible move I am looking for is bounce to 1240 area and from there we continue the down move into early December ( Full Moon) . A break above 1260 would cancel below scenario.
1292 - 1215 = 77 points down (A), 1215 - 1277 = 62 points up (B) ,
C can be 1.38 x B = 1191 and , 1.5 x B = 1184 or 1.62 x B = 1176/1177
As above chart shows, the 1209 is exact 38.2% retracement of the move 1074 - 1292 and can be sufficient as well. This scenario would require the SPX to move strong next week above 1250/1260. It will be an exiting week indeed.
Considering that NYSE and NASDAQ SUMMATION INDEX have a sell signal as of Thursdays close, we shall consider a move towards 1191-1177 range as a possible outcome.
The target set early October was SPX 1254-1276 range and so far profits have been realized and some sector rotation done as well. The Model Portfolio is very much in positive territory since start May 2011 simply because rules are obeyed. We are not in a top guessing business and act as the market dictates. The plan as discussed in prior article is to scale down positions with the next move up. Once positions have been scaled down, some Swing Shorts will be entered with a stop above 1260. The target area would be 1191-1185 to exit the shorts.
Hereunder the steps ...
a) Scale down portfolio with next bounce towards 1240
b) Enter Swing Shorts with Stop just above pivot 1261
c) Target area is 1192 - 1185 , exits shorts accordingly if not stopped out
d) Enter at the same time slowly longs between 1191-1185-1177 ( 1177 less odds )