Thursday Plunge Bath Rub Down

Now this is what I’m talking about!

So we got a little reprieve from the constant melt up – really enjoyed the tape today. The PZI flagged us down early in the day and that’s what we got. What I however didn’t like was the Lite’s ‘Chinese Snake Wiggle’ around the zero mark. This in itself echoed the falling wedge pattern I pointed out here on the blog and to subscribers. So, I knew that we’d get a rally attempt at the EOD, which failed ahead of 4:00pm. However as I’m typing this there’s plenty of monkey business going on in the final 15 minutes in the futures – no big surprise there.

Note the rising participation bubble in the Mole Lite in the final hour – that should have been a hint to you to take profits and move to the sidelines. This was not an easy day to play however as witnessed by the Zero Lite pattern – plenty of opportunities to get tempted to go long – hope none of you did.

Orange: We are embarking on Minor 5 of Intermediate (C) which should conclude the medium term bear market rally. Bear in mind that we actually don’t have to breach today’s 929.58 high as we could get easily get a truncation in this overbought environment.

Blue: We also push up a bit higher from here but count it probably as a 2nd wave to the upside as part of the first leg of Intermediate (X). Whether or not we’ll get a Motive or Minute degree consolidation remains to be seen.

Either way I would like to see a nice push up here, which would present us with an ideal spot to load up on puts.

The Cubes were lagging the Spiders in the past few days and today we finally breached a multi-week diagonal support line. This is a major hit to the bullish case and all I hope for now is a re-test of that diagonal for obvious reasons.

I’m pretty excited right now as we received our 2nd signal in our developing VIX sell signal (selling referring to equities of course). What we need now is one more close above today’s close and we’re golden.

Boy, this was a very productive day and it’s been a while since I’ve had so much fun. Based on sheer number of comments today I believe that sentiment is shared among you rats as well.

Let’s see if we get another push to the upside tomorrow. If we do I’ll have to bite the bullet and start backing up the truck a little. Even if we are completing 5 of (C) right now the upside potential is fairly limited. If we push higher than 960 then I would reconsider my case and probably move to the sidelines. Tomorrow will be a key day and I expect to be chiming in bright and early.

UPDATE 9:35pm EDT: A little bed time reading for you rats: Bonds Blow Off Ben – quite frankly this read made my day.