Some of my readers will recognize my previous work from the Reversion to the Unified Mean (RUM) Wave blog. I wrote it in relative anonymity for a couple years. That work can now be found here.
For now, we have seen a gentle pullback leading into the Fed / ECB news over the next two days. That bodes well for the market. It tells me that we are not going completely crazy over anticipated QE, and that there is a little caution in the air. The internal numbers of the calculated scores below came down off the "red" ranges, but the overall scores are still pretty high. I still think we could drop 100 pts in a heartbeat with the right headline.... something to the effect of.. "Fed fails to deliver anticipated QE".
The first red candle showed up today. Notice the slope of the candles from the last wave. It has been my experience that the greater the slope is going up, the greater the slope is going down. It looks like we would meet resistance (top of the last wave) in the vicinity of 12900, so I would not be surprised to see it drop a little below that and then claw back up to close above that resistance level.
The daily candlesticks have taken on the "twisted ribbon" appearance that signals an end to the momentum. I've seen the market break both higher and lower from this point in the past. The slow stochastic would indicate that there is less resistance to the downside over the next couple days, so that is what I think will happen.
If it does drop a bit, I won't be in a panic because the RumWave tells me that we will continue higher and this is just a brief (and necessary) pause in the action.
GOOD LUCK TOMORROW!