S&P To Hit 956 - Near June 6th, 2010.

I begain to believe that on the heels of Monday’s upside reversal from near 1111 Gapfill on the S&P, that Tuesday should have some kick. Monday’s "tail" to the upside suggested a trend day up.

And, Monday left a potentially bullish Plus One, Minus Two Buy setup on the daily S&P/SPY. Why?

The 3-Day Chart had turned up with the rally of three consecutive higher daily highs into last week scoring the Plus One part of the setup while Monday’s lows traced out two consecutive lower daily lows for the Minus Two part of the equation. As you know the decidedly bullish set up at the February lows was a Monthly Plus One, Minus Two buy set up, the first such setup since the March ’09 low.

Monday’s 10-minute chart had traced out a short-term Inverse Head & Shoulders which projected to 1049/1050. Tuesday started out like gangbusters but the bulls squandered the promise of that momentum as the S&P scored a first hour high of 1148.65. A normal pullback from the strong open should have held green, and held the level of the gap up. However, after a first snapback after filling the gap, the market accelerated into the red. It was all downhill from there with the S&P settling on the important 1121 bull/bear pivot, the mid-point of the 2007/2009 bear market.

With the failure yesterday from near our old friend 1150, the January high, the bulls snatched defeat from the jaws of the bear.

Checking back to the pattern of the 1987 chart reveals that after a sigh of relief from what looked like a successful test, the first turn up in the Daily Swing Chart defined a high which marked the beginning of a crash.

I don’t know if history is going to repeat of course; however, yesterday the Daily Swing Chart turned up on trade over Monday’s high and bearishly that turn up defined a high at a key level. Moreover, instead of capitalizing on the potential of a bullish Plus One, minus two set up, and what looked like a successful test of Friday’s close at 1111 S&P (1110.90), the market collapsed.

Fast moves are often times derived from failed setups. Crashes often times come from false moves. I don’t know if the market is going to crash right here right now but the pattern leaves it in a very vulnerable position, while we know the cycles are exerting downside pressure. If the market is going to crash, again, the SET UP IS THERE. The psychology is fragile with hysteria flying from a Pandora’s Box of problems pried open in the eurozone

For the Gann fans, the decline from the April 26 high of 1220 to the May 6 1065 low is a range of 155 points. The low close for the move occurred on May 7 at 1111 S&P. A measured move of 155 points from 1111 gives 956. 956 was the June 2009 high of the first advance up from the June ’09 low. Is the S&P poised to return to the scene at/near the one year anniversary? It's interesting that counting from the April 26 high, the Gann Death Zone or Panic Zone of 49 to 55 days begins on June 6. It’s hard to make this stuff up.

June 6 is also 120 degrees from the February 5low this year!

June 6 is also a “master date” in the current market as it aligns with 666 the price of the low. 666 ties to 6/6. 950 (which ties to the June ’09 high) is opposite the date of June 6.

360 degrees in price down from 1220 gives 1084. With the bears in control and running the gap at 1111, will the S&P test 1084 this week? 720 degrees in price (or two full revolutions of 360 degrees) down from the 1220 high gives 956!

Isn’t it interesting that the closing high of the first rally up in June ’09 (which coincided as the high of the pivot high in January 2009, the high prior to the last leg down, the high before the low) was 943/944 and is 50% of the range from the March ’09 low to the April 2010 high? Even in a bullish scenario would it be so unusual for the market to pullback to test the "fulcrum" and decline to 50% of the range? Would it be an unreasonable premise considering the lack of volatility throughout the advance, considering that the advance occurred without the benefit of a base or a test, considering that the majority of market participants at the end of April and up until recently thought there “was no vulnerability in the market as far as the eye could see” and that the perception was seemingly universally embraced that the market would not give anything more than another "normal" 10% correction IF one should occur?

Conclusion: We'll be following the harmonics of time and price closely going forward to determine their trend and significance.

While it's possible a big seller on Monday lifted a leg late in the day allowing for a snapback and that the same big seller came back in to hit bids early Tuesday and might be "done," providing a first-hour low that holds 1111, I'd be cautious about intraday long tries unless the S&P can recapture 1132. It's interesting that May 17/18 is 180 degrees or opposite the 1220 S&P price high in April for a possible square out but below 1111 the market remains suspect while below 1142 and 1150 the bigger picture trend remains down.

As it happens May 17 is the anniversary of the beginning of the NYSE from 1792.

That was 218 years ago. It's interesting to me that 218 and 23 (23 years ago was the crash in 1987) are numbers that are due north/south on the Square of 9 Chart. They fall on what's referred to as the Cardinal Cross.