Last post on the SPX called for another wave up to finish this medium-term rally. Wave 4 is most likely complete with last week's sharp rally. We are now at recent highs once again, and can expect some consolidation. A breakout above 1227 will turn it into a support level instead, and offer a near-term target of 1255. Also, lookout for the upper trendline of the wedge. I will be posting the 15-year spx chart at an opportune time in the future.
Sentiment - Reason for Caution longer-term
While the rally and recovery news fills investors with optimism, it may be prudent to take a look at the longer-term picture here. If the 2008-09 decline was impulsive (in 5 waves), - and this is the view of the folks at EWI - we're currently looking at wave C of an A-B-C style rally. This is likely to be followed by another impulsive decline to re-test the lows.
Here's the sentiment picture. Compare it with the highs of 2007, and you will see that we're not far.
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