For the first time since last November, the bears actually seem to be in control of the market. With VIX back in the 20s, and a break of the critical sp'1598 low, the only issue is how many days..or weeks, it will take to hit the lower bollinger band on the weekly charts :)
sp'weekly7 - the outlook/count I am now following
sp'daily4 - time issues
sp'daily3 - fib target
Summary
Well, today was indeed quite a day! This was the first decent bit of two day bearish action we've seen since last year, and it is unquestionably a massive relief to all those bears who have been on the losing side for so many months.
Critical things to take away from today...
1. the break of the rising support at 1620, the 50 day MA, and the 1608/1598 lows
2. break of the rising channel on the weekly charts
3. VIX back in the 20s..a really important sign that 'things have changed'
4. consistent intra-day downside
--
The following is a 'best guess' of the very near term
sp'60min'3
Without question, the 1550/30 area is the primary target zone, and with todays index decline, and VIX jump into the 20s, I'm pretty confident we'll see this wave'4 (ABC) play out.
Looking ahead
Friday is quad-opex, so it could be a lot more choppy than normal. There is no significant QE, and there is absolutely no econ-data/news due.
Generally, Friday will be where we will again see just what the bulls can manage. My best guess is they will indeed manage a bounce (into Monday), perhaps as high as 1620/25.
On any basis, I will look to short all bounces until we are in the initial downside target zone of sp'1550/30, although we could go lower to 1510/1490s, if we fall faster.
To all those on the short-side, from earlier this week, congrats. With the break of the weekly channel, we should be in the mid/low 1500s sometime within the next few weeks.
Goodnight from London
