(to watch on youtube: http://www.youtube.com/watch?v=PE496DuQqRo)
Strong chance of a 50% retracement bounce tomorrow, but that leave next with high odds of a crash.
While I'm not sure if the market is topped for sure, everything is pointing to a crash coming very soon!
(to watch on youtube: http://www.youtube.com/watch?v=1CnPlDEgCZg)
Whether it is days away or weeks is unknown? That 135.14 spy print is still out there and could be a real FP or a false one? I don't know what it is? There is lot's of technical damage done to the market right now, and the market could just as easily do a 50% retracement tomorrow, followed by a nice wave 3 down on Friday.
I was expecting a bounce today, but it sold off a little more to probably finish a 5th wave down inside a larger wave 1 down. So, "if" the top is really in... then we should rally up to some Fib level tomorrow to make a wave 2 up. Then a wave 3 down could start on Friday.
This is just one scenario, as the other one would indicate an ABC move higher to hit a double top, with a quick pierce above to hit that 135.14 print. Everything looks extremely bearish right now... which is why I'm worried that a bear squeeze happens and smacks the bears in the face again.
I hope I'm wrong on that call, and it's only a wave 2 up with wave 3 to 5 down still yet to follow... instead of an ABC move up. We have another intraday print at 132.85 spy from Tuesday, which is about at the 50% Fib level from last Fridays' high to today's low. If we make it up to that level, and the short term charts start to look over bought again, it would be a good spot to get short again.
However, it might also just be an A wave up, and then a small B down would come next... which would NOT take out the current low, followed by a C wave up squeezing out all the newly trapped bears. So be careful at that level, as it could be a trap?
What I think would be best is for a slow move up all day finally hitting that area late in the afternoon, within 2 hours of the close. That would indicate that the market is still too weak to go higher, as it struggled all day long just to hit a 50% Fib level.
But, if it quickly goes up to that level within the first hour of the day, then it could sell off into a B wave down, and then have a C wave up into the close. The key here is to see how strong the market is during the light volume/midday period. The first couple of hours and the last hour will usually have the strongest volume... hence the strongest buying pressure, or selling pressure.
That's how you just get a feel for the market as it could go either way? Once the 50% level is hit, look at the charts and check the volume, as well as other markets related to the spx (the dollar, oil, gold, etc...). It's not easy, that's for sure! While I'm bearish and think that the market is only going to hit the 50% fib level and then roll over into a wave 3 down by Friday, I won't rule out the possibility of a big rally either.
We are in dangerous waters now, and both bulls and bears are going to be tricked equally. Just don't bet all your chips on one color... that's all.