Current Price: 141.35
Weekly Charts: 
MACD @2.899 This week bear cross-over, sloping downward, 
RSI @54.67 Falling from 70 which is a sell signal and signifies end of a bull run
STO @ 76.29 Just broke under 80 after two months above, lots of potential energy here for big drop.
20 week @ 140, last touched in July '12
50 week @ 134, last touched in May '12
200 week @ 113 Last touched in Oct '11
Upper @ 148
Mid @ 140
Lower @ 131.5
Action bouncing from upper towards mid. History: Price has not deflected on the mid BB line in previous 3 cycles over past year.

Analysis: For a healthy correction SPY should approach 132 in about 2-3 weeks. For Bulls, this IS the best case scenario. This would allow the trend to continue upward with the least amount of pullback / time. However, this will break the 3 year long standing trendline upwards which stands at 138-139.5, depending on the method you use to draw it and the time frame in which we hit it. Because this level holds an incredible amount of support (including the .50 fib line and 200 day sma), I cannot see piercing it without some retracement. However anything more than a small bump up sets up the more powerful and more dangerous downward correction. 

Chart 1: If the bulls manage to push the levels back up to around 148 (which is not easy, but still possible), this will contract the Bollinger Band similar to what you can see in Chart 1 below (around May 2011) adding increased potential energy for a more powerful move downward. In practice this confuses investors (who hate being sidelined anyways) into thinking the pullback is over. This addition of bulls only serves to add to the downward surge, which is at this point virtually inevitable from a TA perspective. In a situation like this, a 20% correction from the final departure under the Mid BB could easily be expected from a historical basis.

Chart 2: There are several warnings that this correction will and must occur. The first is the VIX:VXV ratio. Anything over 0.95 is a warning. It has sustained that number and even spiked to 1.00 this past week. This is rare and worth noting. In the second chart below, you will see this accurately predicted the last 3 corrections. The reason this ratio is important, it tells us quantifiably investor sentiment short term vs mid term, suggesting that big money sees a need to pay a premium for short term insurance. 

Chart 3: On our third chart is the $CPCE Equity Put to Call Index. Similar to above, this is a marker of investor fear. This however can lag by a week or maybe two and may not touch or pierce the top BB until the stronger part of the correction has already started and investors scramble to protect themselves. 

As previously noted above weekly SPY RSI levels have touched 70 and are descending, STO levels resided above 80 for two months and now broken under that mark, and the MACD histogram has just broken below 0, and to state the obvious with regards to momentum, prices are weakening. Until the market proves otherwise, we simply are in a contraction. ** Reference Chart 1

Chart 4: In the fourth and last chart, you will see a bearish ascending wedge in which we approaching the tip. Breakouts most frequently occur downwards. This graph suggests that the very max the Bulls can keep up the charade is about 3-4 months. Additionally on this graph, you will see linearly descending MACD's tops similar to set-up in '07 and '08. You will also notice that the slope is nowhere near as negative as 5 years ago and we should not expect a similar disaster to the stock market.

Suggestion: Can you make money in longs during bear markets? Yes, but it is dangerous and you would perhaps do better to use the rips as a set up for shorts against the market. If our illustrious Fed chief, Ben Bernanke, had not installed QE infinity, I would have no reservations on fully advocating that strategy, but do keep in mind that you will be fighting the Fed. That too has also proven difficult in previous markets. You would not be considered a "bad trader" for sitting in cash until some resolve came to light.

 Chart 1: SPY Weekly Chart w/ RSI, MACD and STO


Chart 2: $VIX/$VXV Weekly (Short vs Mid term Options)


Chart 3: Weekly $CPCE Put/Call Ratio


Chart 4: SPY Weekly - Rising Wedge, descending MACD tops

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