Signs are clearly pointing to a top being in within a few days at most. The high today of 118.17 could very well be it? The Dam is overflowing now and will soon explode, as the water of worry will spillover into the happy little town of the bulls below.
When that happens, you will see a stampede of bulls as they run for the exits... but fortunately the bears can swim. The news out today wasn't actually bad, and some of it was good... at least on the earnings of some companies. That sparked the early gap up and rally, as some good earnings and a small relief of debt worries of Greece eased fears.
But, it was short lived as the dollar didn't sell off as expected when Germany said it would help Greece out as a last resort. That scared those bulls who went long before the open. They were expecting the usual sell off in the dollar to occur, as Bernanke and gang are so punctual in doing it all the time.
It scared them I believe, and so the bulls sold off hard into to close. Of course that doesn't necessarily mean that tomorrow will bring more selling, as Friday's are rarely bearish. Another flat day with light volume is more likely. If however, we do get a close below today's close... then Monday should bring some selling.
That channel must be broken first of course, and it could happen tomorrow? I would be shocked if it did though, as this market has been so heavily control the last year that a failure tomorrow could indicate that they are losing that control... and that would be really bad for the market.
I would like for it to be another controlled sell off to either the 1115 spx area, or preferably to the 107 spy area where those fake prints are. Then a slow grind higher in the summer months to form a nice rounded top on the market, with a really large sell off in the fall.
It's really what I expect to happen... which means it won't occur of course. Hold on... let me call my friends at Goldman Sachs. Opps... I don't have any friends there. Well I guess we'll just have to play it day by day, and not worry about next month, or year.
So, for tomorrow I expect the market to remain in the channel. If it doesn't by some odd reason, and it closes below the channel, then we will need another conforming close below it on Monday before I'd be comfortable saying "the bear is back". Remember, Monday's are almost always bullish... so don't fall into a bear trap on Friday.
What we need is a large down day with large volume. We barely went over 200 million shares today on the spy. I'd like to see 300 million, as that's a clear sign that the big institutions are selling... which means they plan on taking it down further. That's when I'll believe that "the bear is back"
Regardless of whether it happens tomorrow or not... we are close, as the dam is hemorrhaging now.