Our forecast remains on track.  Since calling the 1422 top, we’re up a little over 20% on a cash basis (versus -6.5% for SPX) in a little over seven weeks.  We’re likely to pause around 1330, as this represents a key TL on RSI as well as the neckline of one of our recent H&S patterns.  The chart below shows several key price levels coming up.

We hit my RSI target ahead of schedule, meaning we’re probably in for some chop.  The way I see it, chop demonstrates the relatively equal conviction of the opposing bullish/bearish camps.  Bulls are buoyed by the prospect of ECB and Fed easing and an improving housing market (NAR data?  puleeeeze!), and bears are buoyed by, well, reality.

I can’t see us pushing up past TL #5 at this point.  TL #6 would make sense in a pullback, followed by mostly sideways action until we can tag the pink oval at a corresponding peak in SPX.

I’m knee deep into mapping out the upside — especially the timing — and hope to post the results in the next couple of hours.

UPDATE:  3:25 PM

As expected, SPX reacted off the H&S neckline we discussed this morning — seen here on the 60-min chart.  The turn came at 1328.49 — pretty darn close to our target of “around 1330.”

This represents a 50% retracement of the drop from 1365 on May 11 — the last significant plateau, which just so happened to be the neckline of the previous H&S pattern.  A nice little decline to the Fib .707 @ 1309.67 would make for a great Point C in a Bat and/or Crab pattern.  Look for any pullback to reverse there.