NEW YORK ( TheGoldAndOilGuy.com) -- It was just about a year ago today when the S&P was sitting at fresh highs and everyone was enjoying a rather upbeat summer. It was a nice summer, the markets were calm, and there was a surreal sense of optimism. Then, in the matter of a few days, things got real ugly, real quickly.
Well, it doesn't seem like too much has changed since then. We've had mixed earnings reports, ever-evolving worries in Europe, and the always looming fiscal mess in the U.S. Once again, are we in the calm before the storm?
It looks like things in Europe may start to heat up again. Riots turned violent in Spain as protestors took to the street over austerity measures. With seemingly no resolution, a sinking tourism industry in the PIGS, and a typically hot summer August on its way, all signs point to further turmoil.Technically, we're currently seeing a number of bearish indicators setting up in the S&P and other markets. First, on the weekly chart of the S&P 500 Futures (above) we can see what appears to be a bear flag formation developing. Note the recent rise in price since the beginning of June on decreasing volume. A second look at the S&P daily (below) illustrates two intermediate time frames that are currently pointing down.
Completion of two intermediate cycles within longer-term 5 wave pattern.
Downward wave 1 from April until the beginning of June followed by wave 2 correction from June until present.
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