A contrary view

Yes, the chart above is not representative of the overall market. It is of SWN, an energy play.

As we show in the chart, the highs were made in the first week of June and since then we have been consolidation in a tight triangle. The labelling suggests another push down towards 38.

Now, lets go to why we think the overall market is following this pattern. As we noted before, we were expecting a high in the first week of june, we promptly made a high and have traded sideways since. Our next cycle date is June 22. So, it is possible that we have a similar pattern in the SPY. We scanned a few energy charts and a few others AH. Most of them (e.g. COP, PWE) have either a bearish hanging man/black doji (e.g COP) or a possible ending diagonal (XOM) or the formation above(PWE).

Sentiment wise, we scanned a few blogs & message boards, everyone has noticed the triangle on the SPY and is getting prepared for a break of 950. While certainly our scan is not pervasive enough (and sentiment is to be treated with care :-)), we believe a small correction could be in order here. We will weight the bear scenario 55-45.

This post is just for building the bear case. On the SPY, if 95 breaks, this bearish case is dead. If 925 breaks the bull case is dead.