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Given yesterday’s performance, I thought a review of the S&P would be in order.

Figure 1 shows the 12-M Barros Swing.

Figure 1 12-M S&P

We have been in a sideways trend since the secular uptrend ended in March 2000. In October 2007, the failure of the new high to follow through, provided an Upthrust Change in Trend Pattern that still needs to be triggered. While we do have a monthly close below the Primary Sell Zone (see Figure 1), we do not have acceptance: in this case acceptance means we close at or below the rejection area of January 08. (See Figure 2).

Figure 2 12-M S&P Rejection Zone

The 12-M is the important timeframe. We can assume a downtrend in the 13-W and 18-D given the fact that the 12-M line turned down. By examining its options, we have a context to judge the price action of the lower timeframes.

I see three options. For me, the over-riding factor is the yet to be confirmed 12-M Upthrust Change in Trend Pattern; this pattern took place at Ray Wave termination targets and was accompanied by a probable Ray Wave termination structure.This has heavily influenced my assessment of probabilities. So, in order of my assessment of likelihood, with the most probable first (all figures cash unless otherwise stated):

1. A retest of the 13-W breakdown low at 1370 with the upper boundary of the 13-W Primary Buy Zone at 1418. Acceptance above 1418 would negate this scenario and suggest either (2) or (3) below is correct.
2. The formation of a sideways market between 1576 and 1256
3. The resumption of the secular uptrend evidenced by a Whole Point Count above 1576 and/or acceptance above the 18-d Maximum Extension at 1618. This is my least likely scenario for the reasons I gave above.

Let’s now turn to the 5-d timeframe.

Figure 3 shows that a Spring Change in Trend Pattern at 1256. The price action last night triggered the pattern. The minimum target is the Primary Sell Zone 1396 to 1385. Notice that this comes within the 12-M option (1) range. If the scenario is correct, we’ll see a poke above 1396 but hold below the 12-M Maximum Extension at 1418. Note that the 5-d Maximum Extension is 1421, but the larger timeframe Maximum Extension takes precedence.

Figure 3 5-d S&P Spring Pattern

Many commentators I respect believe the market will roll over in the next few days. I disagree.

Apart from the reliability of the Spring Pattern, we have the statistical tendencies that favour the S&P upside:

• On options expiration day (Friday), the day before and the day after (Thursday and Monday) tend to be bullish closes.
• The end of the first quarter window dressing.

For these reasons, I expect the S&P predominantly to head North till at least the end of March. Sure we’ll get intra-day pullbacks and some down days but overall I expect to see prices above 1335 (basis June) end March.

What would turn me bearish? Two events:

1. A failure to close above the POC at 1340; followed by a close below 1305 or
2. A close above the Value Area High (Zone 1 high) at 1370. a failure to reach the lower boundary of the Primary Sell Zone 1385 (Zone 2 High), and followed by a close below the Value Area low 1305 (Zone 1 low)

Figure 4 shows the options.

Figure 4 5-d Market Profile

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