Short term the market is obeying the suggest pattern and a new high within the month of August driven by QE3 speculation is the most likely outcome
THE SPX Weekly Chart remains on buy signal
USD Weekly is pointing towards a decline and should test shortly the 79/80 area.
Despite the bullish scenario for August, OT still is considering the 1998 comparison pattern that started in 2011 and the pattern has been so far perfect for our trading especially since last October 2011 low. The chart below is suggesting that after the August high we should experience a rather larger pullback that will excite the bears and scare the bulls before the final rally towards levels over 1500 in SPX occurs.
Perma Bears already are in disbelief as the market keeps on climbing and surely are so ready to throw the towel at new highs near 1440 or a bit higher. This is not a phenomen as we have seen it in 2009 and 2010 as well. They will throw the towel as they did before and continue to bet against the standard rule
" There is more money lost in guessing tops then in an actual bear market "
NYSE SUMMATION does not confirm the rally similar to February & March 2012 before the sudden decline in the markets leading to a 150+ point drop in SPX. This fact is supporting the above theory of a decline into October 2012 after a new high is made.
We shall still enjoy the rally why it last and get ready for a rather stronger decline leading into early October. The first hint will be negative divergences in weekly chart.