OK! we got the big move that I talked about last week. S&P500 broke out from 1131-1150 range on high volume, to me today rally was a nice short squeeze. What I want to see is the continuation in coming days. If this is a real move we must continue to move higher. Note S&P500 must not violate 1150. If S&P500 drop blow 1150 and 1131 it would be very bearish.
On fundamentals nothing has happened to improve European crisis. Price of European over nigh lending (Euro Interbank Offered Rate:0.956% €) is increasing. The risk premium is increasing European banks charging each other more to lend, therefore I would be very cautious. Please pay attention to possible violation of 1150 & 1131 as tell-tale sign of weakness.
On Elliott wave analysis we are in "c" wave of sub-wave (2). The wave "c" could move as high as 1170. If S&P500 violates 1131 and breaks 1070 bulls would have no chance to move the market higher. In this case my target for sub-wave (3) is somewhere between 1010 to 950. On the other hand if S&P500 gets above 1170 it would shoot for 1220. If S&P500 stays above 1170 for 2-3 days it means my wave count is incorrect, and S&P500 would not tank to 950 anytime soon.
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