Another day, Another reversal pt.2

I am going to keep it short and sweet tonight.  Not just because the market mistress beat me for my glee earlier, but because I just got back from dinner, and I am needing some sleep before tomorrow.

I would like to give a shout out to Beanie (yes Beanie) for giving FSLR the kiss of death yesterday.  Other recomendations gave a nice rally today, allowing for some nice entries for the next move down (likely tomorrow).  Why tomorrow, because we went up today (and yesterday), and we can’t seem to go the same way for more than a day or two.  Aside from that, breadth was strong and volume was modest.  The $NDX took a much needed breather, rallying 2% today.  The maximum upside I would expect here is 1800.  Not only is this a nice round number, but would also retest the July closing lows, as well as a 4th of 3rd retracement for a typical wave 4.

What is interesting about today’s action is the NYSE new highs/lows.  We looked at this the other day, and that rally actually cause an upward movement in the 3 MA.  Here is the chart from a few days back.  I mentioned that the H/L line was positive on that day.  Check out the move on the H/L line today, with a 1.5% – 2% rally across the board.

This is today!!

One final piece of evidence that I am going to lay out tonight is neutral.  We got our second confirmed $VIX buy signal of THE WEEK!!  Wow.  Normally, I would consider this very bearish action, especially since we have not even broken our July lows on most indexes.  But the overhead resistance could be just what the $VIX needs to bounce back down while the market rallies.

So this is what the $SPX looks like today.  On a small timeframe, we are overbought.  We are tracing out a corrective Elliott pattern, whether it is just another (smaller) 1-2 or a part of a slightly larger 2 is yet to be seen.  1260 is the level everyone is watching in the $SPX, and at 11 points away, I think we have our target for tomorrow morning.  The big question is what we do from there?  I saw we fall, but I haven’t been able to get 3 days going yet.  So either sooner, or later, unless we breach our 9/8 highs and continue to rally up through 1300, we can maintain that the current trend is down, and as we have been saying, whipsaw rallies provide a nice opportunity to get short.

I am setting the short term trend indicator back to mixed, becuase I am sick of getting whipsawed.   We will revert is back to down when we see some continued selling pressure.

Skål!