From a bearish perspective, today was VERY pleasing. Despite QE-twist being extended until end'2012, the market failed to spike above yesterdays 1363 high. The only concern (as updated earlier) was the weakness in the VIX.
IWM, bearish outlook
Dow
SP, 4mth
Transports
Summary
There is clearly NO definitive turn lower yet. We could quite easily just churn sideways for a few days. There is also no major econ-data until next week, although there are a few minor data points Thursday morning.
First target will be a close under the 50day MA of 1346
Secondary...10MA of 1331 (but rising still)
I think there is good opportunity to at least get down to test the rising 10MA by Friday - although by late Friday it will have likely risen to around the 1335/37 level.
So..the big question is of course..is wave'2 complete?
The ultimate clarification of that question will only be with a break under the recent sp'1266 low. Only then can we be sure that a new wave is underway - with the lower high of 1363..and a new low <1266. We will likely have to wait until the first week of July for our first opportunity to hit that. I'd look to the July monthly jobs data, Friday July'6.
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I'll be highlighting this issue a lot for the rest of the month, that I think it is very important to see June close at sp'1305 or lower. That will keep the primary bearish outlook firmly on track. A close in the1330/50s, would probably do some real damage to the primary target of sp'1150/00 by late July.
A happy permabear
So I'm pleased with today. The Fed have made their decision, the Bernanke has spoken...and the bears now have a clear 5-7 week window to drive this market lower to sp'1150/00. If sp'1363 was indeed the top of this 13 day cycle, then my new short block from 1358 will work out pretty good in the days and weeks ahead.
A little more later...