SPX 500: Building a Base or Ready to Collapse?

Pinnacle Digest writes: Last week Andre Gratian predicted the market was forming an intermediate low. Over the short term he was proved correct. The S&P added 62 points last week, but may find it much tougher in the coming days and weeks. We witnessed this on Monday as it lost more than 1% in value.

Andre argues that there are three potential projections in respect to the S&P. The most conservative is 1333, followed by 1343. He has an optimistic target of 1353. Since all of them exceed the high of 1329 which has already been reached, the odds favor a move past that level.

Andre reminds us that 1329 may in fact be it for now. If this is the case, the SPX has only made a short-term low and will have to consolidate further before it turns into a prolonged intermediate uptrend. This could entail expanding the current base, either by re-testing the former low of 1267, or even going beyond. Remember that there are still some unfilled projections from the top distribution pattern which call for potential lower targets -- perhaps as low as 1233. If this was the case it would most likely come in midsummer. A Greece exit from the euro could be the catalyst that spurs this decline.

Technical analysis is used to determine where the USO and GLD are heading. Andre believes the GLD may be in the process of completing a correction. If it holds the 149 level it may have built a big enough base to eventually allow it to challenge the top of its declining channel. Andre does however; believe a break out to a new long-term uptrend for the GLD is not in the cards, at least in the short term.

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