Exhaustion Leaves Room For Upside
There are four standard DeMark methods to monitor trend exhaustion, each with their own set of fairly complex parameters. If you are looking for a reversal in the S&P 500, the good news is all four counts have hit exhaustion levels (bearish). The bad news is some of the counts will allow the S&P 500 to trade as high as 1,343 before they become invalid. The levels we are watching are 1,312, 1,325, and 1,343.
From a bullish perspective, the odds of further upside (possibly significant) will increase if/as the S&P 500 clears 1,312 and/or 1,325, which means we need to keep an open mind about bullish and bearish scenarios. We mentioned earlier this week that with monthly counts you can make a case for the S&P 500 to exceed the Spring 2011 highs (see 12:35 mark of this video).
As noted on January 19, an announcement on progress in Greece could be a positive catalyst to push the S&P 500 toward 1,343. If we see an intraday reversal today, our confidence in an intermediate-term top would increase with a close below 1,295.50 and an intraday break of 1,277.58.
