Friday's close was obviously above R1 (chart below) which did constitute a breakout above R1. However, that break was obviously false. I don't think the false break really means anything other than the SPX just wasn't ready to move higher yet.
Symmetry
Off the bottom, we assumed the run up would by symmetrical to the previous drop. That scenario fell apart on 03/18/09 when the SPX moved higher instead of correcting. Now that the SPX topped out at exactly the same level as 02/09/09, I think symmetry may take over again replicating the days between 01/15/09 and 02/12/09, which indicates that we're due for 10-20 days of sideways consolidation.
ST-S1
ST-S1, currently at 815 should support the SPX as it consolidates.
Possible Head-and-Shoulders Bottom (HSB)
If the SPX does test ST-S1 and consolidate for ten days or so it would form the Right Shoulder (RS?) of a HSB pattern. The HSB would be confirmed with a break above NL? at 875 and would imply a further move upward for the SPX of 200 points.
My Plan
I'm still looking to position long near ST-S1 with accounts not managed by mechanical methods. I plan to go 100% long if at my fund cutoff time the SPX is above ST-S1 but below 820. That doesn't look like it will happen today so that plan will remain in effect until I change it in this blog.
