Tale of two triangles

This is a long-ish post so bear with us.

This is what we meets our eye and it seems pretty obvious. Please bear with us for the quality of the screencaps. We had a top at 930 on 5/8, which was a key 45 day turndate (see http://maybeitsclarke.blogspot.com/2009/05/may-8.html). Looking back now, our post could not have been more right. We also believe our plan to stay away on either side has also been vindicated. We have labelled the above as a 'A' leg down followed by a 5 leg down 'B' wave sideways. The 'D' leg bottomed for a shot up on our May 25th turndate. The question is now whether our cycle turn was an inversion? (which can happen sometimes).

Now lets look at the periodicity of the market. The 15 period cycle which this market has religiously followed will culminate a 60 day period on June 1 monday. So the next few days are very key to watch. Yes, quite a few days are key, but the importance of the next 3-4 days cannot be stressed enough.

The bearish scenario is drawn above, if we break the triangle on the downside (885 on the SPX), then we will see lower prices into our june 11th cycle turn.

Now for the more optimistic scenario.

This labelling seems alright too. Now lets look for positives. The weekly chart, looks to us like a bull flag. Volume decreasing for the last 3 weeks in a sideways to lower move. In the last two days, the volume has surged. Today, the green volume is greater. Also the market looks like it is consolidating just beneath the 200d moving average. Such action usually leads to a break of the average. Most markets around the world have penetrated their 200d, it only seems natural for the SPX to accomplish it too. In this scenario the key is the 915 region. If that is taken out, 970 should be on.

Seasonality and The dollar:

Seasonally, May25th-May30th is a small bullish period. The treasury's bottom during this period and then start a strong seasonal rally through June. This is also a bullish period for the dollar. So, the seasonality from now on go to the bears. Which side has more horsepower?

In essence, watch and react, don't act and pray.