[DanRath]

• It was interesting to note that you can really define 4 zones of trading that seem to have had pivotal levels over the last 13 or so years. In the large moves we have been seeing over the last 18 months, this could be a better way of defining where we stand in the big picture.

• We will call these 4 zones the Green zone, the Blue zone, The Amber Zone and the Red zone.

Green zone:
This is the zone from 1,175-1,200 and 1,525 and 1,576. This is very much the bullish zone in this equation where we saw impulsive moves to the 2000 and 2007 highs develop. A move into this zone would make it extremely difficult to retain the view that we were still in a bear market rally environment.

Blue zone:
This is the zone from 923 – 954 and 1,175 to 1,200. It incorporates the lows of October 1998 and Sept 2001 as well as the highs of July 1998 and January 2002. A move into this zone would create a more constructive bias than that held presently. It would suggest at minimum an extended bear market rally but fall short of indicating that we were back in a full blown bull market.

Amber zone:
This falls between 768-789 and 923-954. It incorporates the major lows of 2002 that yielded a 5-year bull market as well as the initial bounce highs posted in December 2002 and Jan and May 2009. This range while it holds is not overtly bearish but a break below would flash big warning signals. It also cannot be described as a bullish range given the low high of this range still leaves the S&P between 58% and 25% off the trend high

Red zone:
This falls between 597-605 and 768-789. It incorporates reasonably good support levels from 1996 (though not major levels) and the major lows of 2002-2003. While we close below this range in Feb 2009 we immediately closed back above in March. A renewed monthly close below would suggest extreme danger and a move to at least the 597-605 range and likely more