Of course this market does not have to go down, and in fact until it is negative the weekly chart remains in a bullish position. What price action would signal that this is just a shallow pullback? Any rally this week that prints above 1355.43 would put the sequential 13 on hold.
Bottom Line: While watching the daily chart this week we can easily keep an eye on whether either of the two key weekly levels (1310.87 & 1355.43) come into play. But first, a quick update to the monthly chart will be presented tomorrow.
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Since the Mar'09 lows, the weekly 9 sell setup has issued 6 times. The market subsequently re-visited the lows of bar 9 at least in the first 5 instances. In the current instance we have not yet seen the lows of bar 9, which sit at 127.75 in the SPY.
More importantly, tomorrow is the first trading day of the month. SPY performance...
2/1/11 1.6%
1/3/11 1.1%
12/1/10 2.1%
11/1/10 0.1%
10/1/10 0.4%
9/1/10 3.0%
8/2/10 2.3%
In fact, the market averages 0.7% gains on the first trading day of the month since the beginning of 2009. 77% of the days have been green.
Given this, it is very possible that the market will re-test the highs tomorrow.
-Erik
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