Last week, I mentioned that the market would clarify its intentions by its behavior in the coming week (last week). This is what I wrote in the Market Summary for Thursday evening:

Today’s market action:

“We have reached a point where we could get a reversal, temporary, and then extend the uptrend, or one that could finish the move entirely and lead us back down to the former lows. There are three reasons for this:  1) Basic projections 2720-2730 have been reached.  2) I have developed negative divergence at the hourly level.  3) a cycle low is due next week (rather than Friday/Tuesday).  

Arguments against:  1) there is a good projection to 2760 and, since we have already gone beyond 2720, it’s possible that we have formed a larger base in a V-shape, which could even carry us back up to 2900 after a short-term correction.  Furthermore, I do not have any distribution pattern at the current level.  2)  Although there is a good probability that the hourly indicator will give a sell signal, and the daily indicator is still in a sell position, if we only have a short-term correction with limited downside (… points), followed by another buy signal at the hourly level, the daily indicator could then be in a position to give a buy signal.  Furthermore, the daily A/D indicator has given a buy signal and would have to be neutralize by a sell signal. 3)  I am not sure of the strength of the cycle due over the next few days, but there other cycle lows due at the end of the month, and another cycle low due in mid-March.  

There is another alternative:  We get a short-term sell signal, go up to 2760, then start a potent retracement.  This would give the daily A/D indicator a chance to give me some negative divergence at the next top, as well as build a distribution pattern.  This may turn out to be the preferred scenario because of the cycle lows going forward!  Also, the 40-week cycle has already peaked and its low is due in mid-May, which does not favor a new high at this time.  Let’s see what happens!”