Friday Fades Away Another Week

Pre-market futures are down sharply on the news that C is exchanging a bucket load of stock for "preferred" equity. Translated the government is basically loaning C about 25b dollars in a way that will scare people into thinking the government is actually buying 40% of C for 25b dollars. C is down 35% - 50% pre-market on the news of the government bailout/intervention/? Other Banks are down sharply as well.....

In other pre-market news, DELL is up 1.7% after earnings.....see, there was a little good news. Also, KSS is down 5.2% after earnings, and GPS is down 4.4% after earnings.....

Even more pre-market news, preliminary fourth quarter GDP declined 6.2%, which is the largest one quarter contraction since 1982.....

Oh yeah, and North Korea wants to launch a missile.....which comes a couple days after Iran "leaked" the information that they have enough Uranium to build a nuke.....What a coincidence that both those countries are rattling their bombs this week when America's government is so tied up with it's own economic crisis.....

Soooooo, the market is set to open below Monday's lows and continue on down.....The Dow (as of this typing) is looking at about a 7,050 open, and the SPX is set to open at about 740. Now, much could fluctuate between this moment and the open. I would imagine the government has it's all-star lineup set to go, speech in hand, to try to stem the implosion. The Plunge Prevention Program is probably going to be in full force today, and unfortunately, I speculate that what will be said will be wrapped in a pretty bow with beautiful paper, but will be questionable on the inside.

I warned yesterday that the market was probably headed back to the lows, and on VC last night I speculated the Dow had a chance to reach 6,900, perhaps even today. Doesn't sound so far fetched now does it?

Here is a chart of the SPX:
(click on image to enlarge)

Here is a chart of the Dow:
(click on image to enlarge)

The Dow has a good probability of piercing through the 7,000 level. The media will be prepared or preparing their "shocking" headlines before the market even opens. Government leaders probably prepared their "speeches" last night. And the contrarian Bulls probably prepared their game plan last week.

I explained an if-then scenario for today on VC last night, even though none of this information was out yet this morning. I will explain it again here. If the Dow reaches in to the 6,900's, then the media will unleash a torrent of "shock and awe" headlines (because that's what they do, sell shock). The amateur traders and retail traders will all load up on shorts and puts because they are always "reacting" to the news. Then the "savvy" (or so they imagine themselves) Bulls will load up their buy orders on the "hysteria" in order to buy when the "crowd frenzy" is reaching its climax. And the government will validate the Contrarian Bull's opinion by stepping to the microphone and saying all kinds of things intended to Prevent the Plunge.

I don't know how deep the move will go today, no one can predict the depth of human emotion in the middle of a "crisis." But I would guess that the moment a "6" goes in front of the Dow at the Big Board, the world will get shivers running up and down its spine and the news will go wild. The initial shock that pulses through the market (and the world) will probably take the Dow (and the market) further down for a while before it finally turns around. I don't know what the exact number will be, but it will be a wild, wild ride in the mean time.....

Today will be a very newsy, very intense, and very sharp day. The best case scenario is a gap down, a quick, sharp jab in to the 6,900's, a huge "value buy" from the Contrarian Bulls, and a climactic turnaround in the markets. I hope for that scenario because it would be the one that would most likely hold up the markets and get a nice counter move going back in to the 8,000 area on the Dow, and take us away from the ugly cliff of doom. I don't think the market will start a new, long term bullish run after said climax, but at least it could start a decent intermediate term uptrend for a month or two.

For now, it looks like a very bearish morning, followed by, well.....

I just checked the pre-market futures and the 7,050 Dow and 740 SPX opens are still on the table.....

WE SHALL SEE.....

7:35 am MT: Intra-day Update: The market gapped down sharply as the futures indicated. The first wiggle is happening right now. Some time in the next little while, especially if the market can wiggle back for about 15m - 30m, then I expect another sharp leg down. After the sharp leg down, and if it takes the Dow (market) in to the 6,000's somewhere, then I expect the probability of the if-then scenarios I wrote about.

7:38 am MT: Intra-day Update: No more wiggle, the leg down just hit.

7:41 am MT: Intra-day Update: The next leg down is happening right now. Playing puts is challenging because you basically have to hop on board a speeding train. If the train keeps speeding, take only small positions because of the "oversold" intra-day risk. Any counter moves in the next hour are also put buying opportunities, but also the same story, watch your intra-day oversold risk a bit unless you get a nice clean signal. The best case scenario for a put will be a nice Bear Flag on the 10m or 15m charts, but remember, you might not ride the put for more than a few hours.

7:43 am MT: Intra-day Update: Here is the beginning of the first wiggle. We'll see if it leads to a little counter move, and an intra-day Bear Flag.

7:46 am MT: Intra-day Update: The counter move is building a bit, watch for the 7,100 area on the Dow and the 740 - 742 area on the SPX for potential put opportunities on a rollover if this forms well.

I'm going to stop typing for a while and watch all of this. I've laid out scenarios the best I can for you today. Keep a sharp eye on the price action this morning, this is already a volatile day.

12:55 pm MT: Intra-day Update: The price action today is the worst case scenario for the Bulls. If the market had just blown this whole thing out in a big climax we might have seen a bounce. But to push back into the gap and then just ooze along the gap puts the whole last hour at risk. The problem with the price construction is that if we finish the day near the lows, then there is a good probability the market continues to fade early next week rather than build off a bounce.

I hope I'm wrong, I like puts as much as the next trader, but I don't want the market to go completely in the toilet to satisfy my desire for making money on the way down.....

With the current intra-day price construction, the last hour is at risk for a fade into the weekend. We shall see.....

1:10 pm MT: Intra-day Update: The next three 5m candles after I typed the last entry were all down, and the 60m candle has rolled over on the gap, just as I speculated. I hope this can come back before the close, but I think the market is carrying too much "uncertainty" fear heading into the weekend. So 45m to go, 45m to keep things from going ugly and heading into next week with a greater probability of more selling.....

1:18 pm MT: Intra-day Update: Add a fourth big red 5m candle to the list.....

1:49 pm MT: Intra-day Update: Looks like a Hot Potato close, some Shorts look like they just covered right after some Longs look like they just dumped. This could be one of those crunch and chop closes where everyone tosses the hot potato back and forth.

1:57 pm MT: Intra-day Update: The hot potato just got tossed the other way.....

2:00 pm MT: Market Wrap: Unfortunately I was correct, the market was at risk for a last hour fade, which dropped price action on the major indices to near the lows of the day. It also leaves the Dow vulnerable to a drop into the 6,900's on Monday (the Dow was only 34 points away from having a 6 in front of it today).

If you look at the chart of the DIA, you will see that last Friday's gap and price action was almost identical to today's gap and price action. The market is still in a sour, shaky mood, and now Monday carries more selling risk than it would have if this had all blown off today. The last thing I want to see is a continued, systematic bleed out on the markets. But that's exactly what's happening, with no fundamental end in sight, and because of today's price action, no technical end in sight, at least for early next week.

Another week, another fade. Another day, another financial sector scare. And the worst part of it all right now is the lack of leadership.....Hopefully that corrects soon.....It had better correct soon.....

Fussy Market Continues

Whether semi-real (Technical Bounce) or manufactured (Plunge Protection Program Bounce), the market is still fussing its way through a potential short-term bottom. I won't bother going through the Weekly Jobless numbers or Durable Orders data from this morning. It's all bad, and it's all worse than expected, which is starting to be the new norm recently. Nevertheless, pre-market futures are up slightly (although they came back a bit on the data release). When worse than expected becomes the new norm, the market has a decent chance for a technical bounce, but the bounce can be fussy before it bounces, and the follow through doesn't lead to a sharp uptrend.

Here is a Daily chart of the SPX:
(click on image to enlarge)

Here is a 120m chart of the SPX:
(click on image to enlarge)

Notice on the Daily chart that the price action the past three days is very similar to the price action in the middle of January (boxed highlights on Daily chart). The possible pseudo Tweezer Bottom right now is fussing around just like it did then. The current short term range has been set (pretty much between my two support and resistance lines I've had drawn for the past week). I can speculate all I want within the range, but until the market closes outside the range, it's still in the short term range.

Also notice the Reverse Head and Shoulders forming on the 120m chart. Again, the pattern is fussy on the right side, but it's still forming. And again, the range is set, and it's the range until it isn't the range.

I speculate that we won't see a Bottle Rocket Bottom but rather we'll see more fussing around for a little while this morning before the market decides if it's finally past the latter stage of the pukes, which is the dry-heaves and shivers. The shivers may be starting to subside, but the market is still at risk for a couple more dry-heaves before it can overcome the gags on all the news lately and try a modest Technical Bounce. We'll see what fun today brings.....

7:37 am MT: Early-day Update: The initial thrust after the open off of the positive pre-market futures took the market right to resistance, where it's wiggling and flopping as I type. So far the price action is going pretty much as expected. The fun has already begun.....

8:30 am MT: Intra-day Update: The market has made several pushes into resistance, but the pushes look more like a process that is exhausting the market rather than invigorating the Bulls. I think the Fuss and Flop action will continue for a little while longer while the market tries to catch its breath. We'll see if the push can build or if it will flop back down into the middle of yesterday's fuss.

12:45 pm MT: Intra-day Update: The market is at an important intra-day tipping point. A fade below 760 on the SPX and it may drop in to the 753-755 area, which would make it unlikely to confirm a bounce today.

Here is a current 60m chart of the SPX:
(click on image to enlarge)

You can see the market starting to fall through the intra-day uptrend line. I drop through the line and the market is unlikely to pick up enough momentum to confirm a bounce today. That would mean fund managers would have to face the prospect of trying to confirm a bounce tomorrow knowing they will have to hold into the weekend.....which won't exactly thrill a lot of Hedgies.....

12:56 pm MT: Intra-day Update: There goes the mini-dump, just as I warned.

12:57 pm MT: Intra-day Update: That didn't take long, it's already at 756.

Here is a current 60m chart of the SPX:
(click on image to enlarge)

You can see how quickly the Daisies (Day Traders) took the market to the next level once they saw what was going on. The market has gone deep enough that, barring a little late day freneticism, it will be unlikely to come back far enough to confirm a bounce today.

1:02 pm MT: Intra-day Update: The market tagged 755 right on the nose (754.93).....so the fussiness continues for another day.....

Ideally, I would like to see the market come back in the next 50m and try to close in the 775 area today, which would give traders a tailwind going in to tomorrow. It would also give the Bulls just enough to stay engaged, and it would get the Shorts worried about tomorrow.....which, if nothing else, would be fun to watch.....

2:00 pm MT: Market Wrap: The break of the 60m chart trendline that I warned of earlier led to the strongest intra-day downdraft today (a drop of 10 points on the SPX in about 30 minutes). It also made the day unrecoverable for the Bulls, which I also warned. Traders closed the day almost at the low, so the fussy, nervous, "what's the government going to do next" price action continues.

The four-day price action is going the wrong way when you compare it to the four-day Tweezer and Bounce from mid-January that I highlighted this morning. Now the best case scenario for a short term bounce morphs into a Tower Bottom, which means that the market has a better probability of fading tomorrow to the 742-744 lows before trying to build again.....What have I been saying about cherry picking calls in this environment? (Over and over and over again). If you have been following my cousel and keeping trades to short swings, trading very lightly, and looking for stock option trades more than index ETF option trades, then you have probably stayed out of a whole lot of trouble.

We are actually at more risk for another leg down now (Dow 6,900 anyone?), which is a sobering thought. I don't think we will get a Dow 6,500 even though that is the next support level down, but things look fussy at best and crazy at worst. This market does not like the direction of the country right now, and I'll let you draw your own conclusions as to why.....

Right now, I'm rooting for a hold of the mid 740's on the SPX and a Tower Bottom type of reversal. But I'm also not holding my breath.....

Technical Bounce At Risk

First Title of the Morning: "Technical Bounce Still Alive."

I chose my words as carefully as possible.....

The speech last night is obviously not having a big positive impact on the market (as I warned yesterday). Pre-market futures are down a little before the open. Under normal conditions (or is that abnormal now?) this would be a wiggle out of the gate and then everyone would pile on and drive the bounce straight up in a hurry. However, in the "new normal" the wiggle could go deep and gyrate around a bit before traders decide if they want to take the market up or not.

I speculate that we get the technical bounce anyway (and not fundamental bounce, and not the news bogey bounce) - if for no other reason than short-covering. Nevertheless, the odds are not extremely high, probably around 60%, and the market just made a lower low, so you don't have to open the barn doors on your portfolio and get loaded up to your eyeballs on this, exercise prudence.

As for a follow-up to those of you who held calls overnight on the "speech", you'll have to pick drop dead points for your stops (on the Q's it won't be easy because the wiggle this morning will be less predictable as per our "new norm." However, if I was in the Q's, I would probably not want it to go much under about 28.40, say about 28.29 and I would have to walk away).

Here is a chart of the SPX:
(click on image to enlarge)

You can see the SPX went right to the resistance line I had drawn out for you yesterday early in the day (and from the past week). I speculate the SPX (and the market) will be able to push up in to the next range, but I'm actually looking for a pause, or even the end of the first swing half-way in to the range at about 790. I think that even if we exceed 790, the Bulls will be leery of the 800 - 805 area and perhaps turn things a little early.

So I'm looking for wiggle out of the gate, a 60% chance of holding and following through to the upside, and a swing that gets its wings clipped a little early after 1-2 days. We shall see.....

7:55 am MT: Intra-day Update: The market has hit its first short term wiggle tipping point. It starts with the Dow this morning. If the Dow can't hold 7,250 in the next little while, then the market is probably headed down for a test of 755 - 757 on the SPX. If the market goes that deep, then the short term bounce gets squishy enough that it becomes even more challenging to cherry pick calls (which I'm not doing yet). We'll see if the Dow 7,250 will hold or not.....

8:02 am MT: Intra-day Update: The Dow didn't hold 7,250. As soon as it broke the market sold it down (as I type). The Dow dropped 30 points in 1-2 minutes after the break, so the 7,250 line was a good tipping point just as I warned. In fact, the SPX is already at 757 in the next minute of me typing this. So now the battle is 755 - 757 on the SPX, flip over to that index now and watch that area for your market checks.

8:09 am MT: Intra-day Update: Based on my analysis of intra-day price action, the SPX is at risk for not holding the 755 area now.

8:11 am MT: Intra-day Update: This is the next critical tipping point. The market has gone deep enough that I'm going to be very, very selective if I decide to play any calls (which I may not). I still like a few individual stocks for calls, but I'm patiently watching this price action. The SPX needs to hold this area, otherwise the market is at risk for another drop down to the 745 area. If the market goes that deep, I will wait for price construction later in the day before deciding on any trades. I'm watching stocks like GS and AMZN for now and hunting around for other stuff. We'll see if anything forms or not.....

3:10 pm MT: Market Wrap: There was a lot of news manipulation of the market today, which was pretty predictable to the those of you paying attention to recent government activities. I was talking with Ben Watson and he called it the "Plunge Protection Program", which I thought described the situation perfectly today.

The net net with the price action is that the Technical Bounce is still alive, but at risk. What was a 60/40 proposition going in to the day is now about a 55/45 at best. There are plenty of Sellers out there and they keep dumping stock on the market every time the SPX climbs another 10 points. I still think the current downswing is crispy, but the bump yesterday gave the downswing some wiggle room to take an intra-day leg down to new lows. In other words, we were very oversold until yesterday. Now the market really needs to build something tomorrow or its at risk for some more Friday selling. It's always a fun ride, we'll see what tomorrow brings.....

Market Finally Bounces

Early pre-market futures are indicating a gap up for the third time in the current downswing. The prior two up-gaps led to immediate fades, and this one may do the same again. However, the current downswing is getting pretty crispy, even for our current "Keystone Cops" fundamentals (I let you guess who the Keystone Cops are.....).

The fade went quite a bit deeper than I expected yesterday, but I'm not that surprised that traders are still so queezy. The market is very nervous right now, and rightfully so. However, all bad things must come to an end eventually, even if it's after a complete implosion. The current downswing is facing up-gap #3, and it's getting a little risky to go dumpster diving for too many puts this far down in the rubble. Don't be surprised if the market fades the gap a bit this morning, but also don't be surprised if we start the settling process for a short-term technical bottom. This may be a day where it's tough to play anything, but I'll keep an eye on it anyway.

There's not much to say, technically, that's different than yesterday. The market did fade to new lows, but the downswing is oversold, the market is IT Bearish to Neutral (not straight up Neutral for anyone still clinging to the old posture) , and the market is in a support area. Now it's a matter of watching to see if the support zone holds or not. The index charts will have to start a new reversal process after the candlesticks from Friday were blown up yesterday, so I'm watching to see if we get a pause and settling to the downswing today. I will toss up a chart or two after the open if price action starts telling us something new.

9:00 am MT: Intra-day Update: When the SPY (market) held the gap 45m ago, the complexion of the downswing changed. The probabilities are greater now that we get the pause day I was looking for. The price action intra-day makes sense when placed in context of Benny's speech today (lots of fluffy talk), and the Presidential address later this afternoon (more fluffy talk). If nothing else, the Shorts will want to cover a bit as a hedge against anything of substance that might be spoken (not likely). So the technical move (not fundamental move) is taking shape. The probabilities of a short term bounce are increasing, especially if the market can hold the pause this morning.

Here is a 5m chart of the SPY from 45m ago showing the important turning point in the downswing: (I couldn't post it in real time like normal because I was running a webinar, but at least I told the attendees about it when it was happening.....not that it helps you any.....oh well.....):
(click on image to enlarge)


Here is an updated daily chart on the SPX showing minor intra-day resistance at the mid-point of yesterday's real body:
(click on image to enlarge)

So far, it looks like a pause day, and the catalysts are in place to keep it a pause day. Benny could always derail that, but I doubt he wants to kill the market. I speculate he will want to say all kinds of positive things in order to prop things up. The market has a good likelihood of a short-term technical bounce. However, don't get too aggressive with the bounce, the market is Neutral to Bearish at best, and at risk for another drop after the bounce is over. Anything bullish you do (and I'm probably not doing anything bullish today), do it small.....

12:45 pm MT: Intra-day Update: At this point I want to see the market hold the line a bit. I expect a little wiggle back right now off the pop the past several hours, but I want the market to hold the general area into the close in order to keep the probability of a short term bounce alive. Here are three stocks that are interesting bullish movers today: GS, NTRS, and AMZN.

1:40 pm MT: Intra-day Update: Barring an end-of-day collapse, the market may actually Engulf today. This is similar to the November low price action, therefore the short term bounce is finally happening.

Market Fades Away

Pre-market futures are up strongly on the news that the government could "acquire" as much as a 40% stake in Citigroup (which is exactly the bank I would have thought would be the first to want to become "nationalized"). Not every bank will "want" to be nationalized, but the rumor of the continued government takeover of the banks has BAC trading higher pre-market, as well as European and Asian markets.....yayy....the government is taking over the banks.....let's buy some stock.....

So.....we are about to get a short-term bounce in the markets. The catalyst for the bounce in the capitalist financial system is a socialist takeover of the financial system.....hmmm.....this goes right back to what I said last week. Any bounce we get short-term will not be on improving fundamentals or a pro-capitalistic government decision, it will be mainly because of the short term oversold price action. Traders are looking for an excuse right now, and even a bad excuse will do.....

Obviously I don't think this is the beginning of a new secular Bull Market that will propel us forward the next 27 years into financial bliss. However, I do speculate that the market will "settle" in this area and attempt to bounce short term. The low on Friday could even be an intermediate term low, or long term low.....but any trend we are about to experience has to be taken in the context of the socialization of the financial system, which isn't exactly the kind of catalyst that creates powerful, long-term Bull markets.

This is what I think.....I think fund managers are going to have a real love/hate relationship with the news today (and this week). I think that fund managers are desperate for a positive move in the markets, but I think that even the more inexperienced fund managers are starting to realize that the economy will only get on track if the government either makes competent pro-capitalistic decisions, or it gets out of the way.....and neither scenario seems likely.....So the market will probably bounce today.....and the Fundies really, really, really want a bounce so very, very badly.....therefore, we bounce.....

Here is a chart of the SPX:
(click on image to enlarge)

Here is a chart of the SPY:
(click on image to enlarge)

You can see the Hammer on the SPX doesn't account for the gap down on Friday, which means that it hasn't synched up with the SPY very well. That leaves me to speculate that the market will either settle a bit before bouncing, or the bounce will be short term only because we haven't seen a climactic type of blowoff day, or a dramatic reversal day. The Prophet chart of the SPY has a couple of price goobers, but the gap is still good data.

The SPX will probably hold and build off the Hammer today (or tomorrow) and attempt to go back and re-test the 805 area. The 740 - 755 area is an important support area, and traders will probably hold the area for now - if for no other reason than because they think it's "supposed" to hold, and not necessarily because the market is so "cheap." Remember, I've talked about a macro-economic paradigm shift (which Bill Gross at Pimco talked at length about). That means the way the market is valuing "cheap" has changed under the new government, which some traders are only just beginning to realize.

Nevertheless, I speculate that the market will hold and bounce on these areas, with a short term bounce, and then after that.....we shall see.....

9:00 am MT: Intra-day Update: And there you have it.....the market is "settling" before a potential bounce.....I wasn't really strong on the Bottle-Rocket Bounce, rather I thought we would settle and turn. The market is "settling" in a potential support "area" right now, we'll see if we get the turn later today or tomorrow.....

10:10 am MT: Intra-day Update: The market is at a critical short-term tipping point. If it doesn't hold the current levels then it could be more like Wednesday before we get any possible short-term bounce. The fade today is another indication that even the most inexperienced fund managers are not buying the rash of "announcements" like the 40% stake in C, or the Bailout Czar that was just appointed. I don't want any unduly strong political comments on the blog, however, it's also important for you too stay informed and in tune with the mood of the market as you make your trading decisions.

10:55 am MT: Intra-day Update: The market just faded through support.....my speculation is this - don't look for this to confirm a bounce today.....

Shock and Pop Oozes into the Close

Pre-market futures are down sharply on a couple more bad earnings reports, this time from Retail-related stocks LOW and JCP. The futures wiggled back a bit on an in-line CPI report, but for the most part, the market is set to continue the fade it started yesterday on the failed gap up.

We may experience a Shock and Pop kind of day, where the market gaps down, stabs down sharply, and then get's so oversold short term that traders bring it back on a technical bounce. Nevertheless, there's no tremendously good reason to cherry pick calls today, especially in the afternoon.....going into the weekend.....It's possible that there will be some call opportunities, but the gap failure yesterday took out the higher probability scenarios for a nice bounce confirmation.

It's possible that we get the last leg down of the current downswing today, which could be playable for puts, especially if the market wiggles back a bit on the gap down at the open. But any put plays you will want to lock as you go (and bring stops to break-even) so you lower the probabilities of a loss on an "oversold" reversal today. The puts won't be easy this morning because the gap down this morning is going to be pretty big. I would actually be a seller of part of any put position on the gap, then watch the construction of the wiggle to see if it looks like the market will roll over and take one more sharp jab down (which I would speculate will be the last leg down of the current downswing).

Remember, any move will simply be a short-term technical move. Traders (including many of the "inexperienced" fund managers) are done with the news bogeys from the government, they aren't going to believe them anymore until we get something with real, actual substance. In addition, even the most rosey-eyed fundies are starting to realize what I have been saying for 4 months (while the market continues to fade to the low end of the intermediate term consolidation), and that is the fundamentals aren't there, and they aren't coming back strong for a long time. Perhaps we will see a big, climax type of day some time soon, but even that type of day will probably only lead to modest trending and not a new secular bull market.

Here is a chart of the SPX:
(click on image to enlarge)

The SPX is set to open in the 765 area, which opens the door for a move down to the 750 area. At that point you will want to lock and walk on most of what you have left in the way of puts, at least for now. I'm not even bothering to show the chart of the Dow, which will break to new lows today.....

For those of you listening to me rant on VC last night, I was right about this morning.....So much for all the chatter about an "oversold" market.....I keep reminding you that the only real thing propping up the market from the continued fade is the inexperienced, rosey-eyed fund managers. I wonder how many people who just "had to buy stock" or just "had to buy calls" the past several days because the market just "had to start trending up" because it's just "so oversold" are wishing they had never pulled the trigger. That's why I have been taking it one short swing at a time (for calls or puts) for a very long time. I don't like to buy stocks or options and ride them underwater $5 - $10 because I'm mentally stubborn and have to prove that I'm right.

So look for the Shock and Pop today, especially if the market reaches 750 on the SPX. We may see a big, strong comeback into the close, but I still speculate that even if the market comes back sharply, it will still fade a bit and ooze into the weekend. For now, it's heading down.....

Lastly, believe it or not, I have Jury duty today.....so I won't be able to give any intra-day updates. You're on your own today, I laid out the if-then scenarios for you as clearly as possible. Strap on you seatbelts cause it's going to be another wild ride.....

6:00 pm MT: Market Wrap: I just got back and checked the market action for the day. It looks like it played out just as I warned both last night in VC and this morning before the market opened. Pre-market I stated that you should look for a gap down, a wiggle back, a roll-over and test of 750 on the SPX (sharp jab down), a pop back (the Pop after the Shock), and a fade/ooze into the close. I just checked the DIA/SPY and the SPX and the price action mirrored exactly what I stated. We got the gap down, then a beautiful wiggle back in the form of a Bear Flag (15m chart on the DIA for example), then a stab down to 754 (just about 750), then a sharp pop back, then a fade and ooze into the close. The Dow finished down another 100 points and the drumbeat goes on.....

Here is a 15m chart of the DIA as a perfect example of the price action I warned about pre-market:
(click on image to enlarge)

Here is a daily chart of the SPX showing the drop almost exactly to the support line I drew for you pre-market:
(click on image to enlarge)

So much for all that talk around the hemisphere about cherry picking the bottom.....Today played out just as the charts were warning, and as I speculated and warned you about both last night and this morning. Trading is about calling the market. It's about strapping on the seat belt, getting sharp, tuning in, getting the rhythm, and going with the probability. And then doing it day in and day out. This isn't about ego or rightness or wanting to be in the spotlight. A guru can go in the toilet just as fast as they rise to glory. Who cares about gurus, or egos, or spotlights? None of that matters if the the guru doesn't trade profitably. The thing that matters is getting in there and doing battle and fighting for your trades every single day. That's what I love about this, no one is above anyone else, and anyone can do this if they work hard enough.

Rangey Bulls Keep Rowing...but it's not easy with hooves

Earnings and sales reports are mixed, with HPQ and AAPL down pre-market on different reports, and NBL, S, CVS, and NEM up after earnings reports. In addition, the January PPI numbers came out higher than expected, which means that goods at a producer level are holding their pricing power. The biggest number of the morning, and the one that matters the most going forward was the Weekly Jobless Claims report, which came out only slightly worse than expected.

Overall, the news really isn't that great, but it's also not "more catastrophic than usual", which means the Bulls may decide they like the taste in their mouth after chewing for a while. The taste may not last for a long time, but it may be enough to start a short term bounce. Pre-market futures are up strongly as a result of the Bulls sweet tooth, and the SPX (SPY) is set to gap up close to 800 as a result, which would probably start the process for a short term bounce.

Here is a chart of the SPX:
(click on image to enlarge)

Here is a chart of the Dow:
(click on image to enlarge)

The SPX looks stronger pre-market than the Dow and will probably make a run at the 805 area this morning. I speculate that we will see a gap with a little wiggle, but that 805 gets tested fairly quickly. The key to the day is the SPX holding the 788 - 790 area. A dip below those areas and it gets a little tougher to hold on to calls. However, the true drop dead area is a move below 780. If the SPX can hold the gap, then there could be some nice call trades between the low 790's and the 805 - 810 area. I don't expect the SPX to punch through 810 today, but as always, anything is possible. A close above 805 would confirm a Morning Star Reversal, and it would be nice to get a little volume behind that if it happens.

The Dow is not as strong as the SPX early-day, but it is set to gap up (Dow/DIA) over the 7,630 area, which - like the SPX - is above the high of yesterday. The Dow has a probability of pushing to the 7,700 area today, and perhaps overshoot a bit just like the SPX. A strong move would take the Dow to 7,750, and like the SPX, I speculate that the Tuesday candle will hold and the Dow won't make it to 7,800 today. If the Dow can close above 7,700 that would show some strength, and a close above 7,750 would be a nice Morning Star Reversal. A drop below 7,480 is a drop dead area for calls.

Remember, you don't have to set trading volume records every single day, some days (like yesterday) there just isn't anything there. Today looks a lot better than yesterday, but that doesn't mean you have to open up the barn doors. It looks like a decent day for some short-swing calls, but scale in after the open, don't dog-pile in (just in case we get a gap test). If things hold and start to run towards 805, then add some more and take the short swing. Scale out of some of the call positions in the 805 area and bring your stops to break-even on the remaining contracts, and then scale out of most of the rest if we reach 807 - 810.

11:20 am MT: Intra-day Update: The Bulls went Rangey again.....I have some SPY calls from this morning, but since I scaled in just as I mentioned above, I was able to pick up some at the bottom of the range and lower my cost basis. Now the market is headed towards the top end of the range, at which point I will unload the calls for a small profit and probably stand back for the rest of the day.

Here is a 30m chart of the SPX:
(click on image to enlarge)

You can see the 3-day range is still intact and the market is bouncing a little intra-day. Anything in the 792 - 797 area is a good place for me to start scaling out of most of my calls. I won't enter a new position until the range breaks above 800. It's also possible the range breaks to the downside, so I will be ready for that as well, although that will be a smaller "paper" trade for me since the Bulls get frisky in the mid 7000's on the Dow.

12:10 pm MT: Intra-day Update: There's not much more to say, this is another range-bound day. I did scale out of the SPY calls around 790 for a small profit on the day. The Bulls keep fighting for the low end of the range so this could be a basing pattern intra-day. It could also be a Rectangle continuation that leads to a downside move. Either way, the market is range-bound right now and I'm tired of playing the lows to highs, so I'll watch for a break of the range, perhaps tomorrow, we shall see.....

12:20 pm MT: Intra-day Update: The market is starting to break down on the range, this is a critical moment for the Bulls. If we don't see another confirmed bounce on the 30m charts soon, the Bulls could lose the battle.

12:40 pm MT: Intra-day Update: The Bulls keep fighting for the low end of the range, I'll give 'em that. It's just not easy to row a paddle with hooves.....and the paddle may be about to slip into the water.....

1:50 pm MT: Intra-day Update: Just as I speculated, when the Bulls dropped a paddle and the market broke the low end of the range, they pulled out another paddle from the boat and started rowing frantically.....another range-bound day.....

Market Data Day

This morning will be filled with market data as Housing Starts/Building Permits and Industrial Production/Capacity Utilization are yet to report. In addition, DE blew it's earnings and HPQ has earnings after the close. As always, we are also getting inundated with bailout/recession type of news with GM submitting their viability plan in order to secure "stimulus" aid.

Yesterday's selling didn't wast any time as usual. Like so many other days in our new world order market saturated with Fund Managers the Dow dropped sharply and quickly to within breathing distance of the next support. I expect the market to settle out in the 7,500 area or slightly lower after the current intra-day consolidation is over. However, much of that will be dependent on the economic reports that are yet to be reported this morning.

Here is a chart of the Dow:
(click on image to enlarge)

Here is a chart of the SPX:
(click on image to enlarge)

The Fundies have been trying to buy the market over and over again because they think it's very oversold. The problem is the fundamentals and the new economic paradigm don't support their thesis. As I watch them chop and gyrate and flail away looking for their bottom, I'm reminded of something about two hands and a flashlight.....

Nevertheless, if we get soft data this morning, I'm still only looking for a little more carry-through on the downswing and then a settling down short-term. Remember, we are also at risk for a news bogey, although by now you'd think the Bulls would have figured it out.....and that reminds me of something about cheeze and a bell......

1:30 pm MT: Intra-day Update: The market did settle in right below 7,500 (7,480) just as I speculated pre-market. This is turning into a Pauser Day, also as I speculated. So the range has been established, which will probably be broken tomorrow (Friday at the latest).

Spending Bill Implodes the Market

There, I said it.....The Stimulus Bill was voted through both houses of Congress. No other media outlet want's to run the headline that way, but I will. When you analyze the chart of the Banks ($BKX) and the Descending Triangle, which is the sector the spending bill was designed to help more than any other, you can see that traders were cautious already about "help being on the way." The market had no other piece of data to react to this morning except WMT, which is actually up this morning after earnings.....

The headlines are ranging from "Stocks Drop Around the Globe" - Bloomberg (i.e. blame it on the European markets) to "Stocks Set For Opening Slide on Economic Gloom" - Yahoo/Reuters (i.e. blame it on the recession.....I guess the recession wasn't a recession on Thursday and Friday). CBS Marketwatch carried this one "Worries Over Autos and Banks Overshadowing Wal-Mart Results", and CNBC threw this one out "Stocks Slide After NY Fed Report." My guess is this, because CNBC knows how to create a psuedo-correlation better than any of the other media outlets (after all, this is the business game they practically invented), and since their headline sounds the most plausible, that by the end of the day many other media outlets will pick up on their idea and run their own elevator analysis based on the same type of headline.

I ran the post opening with the critique of media, news, and analysts so that you will get a real-time understanding of what I have taught you many times before - which is that the majority of the time their information is wrong, flawed, or politically motivated. Now, here's where I will throw in the bit about don't put in specific political references in the comments section today, but I wanted to put the info out in real time so you can understand that "news commentary" is usually wrong and can often times be dangerous to your trading - and trading profitably what we're all focused on in this blog.

So sifting through all the noise, what does this all mean? It means the Dow is headed towards 7,500 (it's only 145 points away right now). It also means that the next news bogey is likely to be the "lecture" I've been waiting for. It also means that the Bulls are finally grasping the idea that fundamental valuations aren't coming back any time soon. And it means that the Banks (look at the $BKX breaking down through the Descending Triangle I warned about in VC on Friday) are headed for tough times right now and not better times because of the "Stimulus Bill." It also means that you can expect more turmoil from government as political leaders and organizational heads scratch their heads, look for who they can blame, and then finally take a bullying approach to the markets to "force" the outcome they want.

I know I'm not painting a very nice picture here, but that's not my job. My job is to get you information that helps you trade profitably, clear and simple. The best case scenario is that the Beardicat Zone continues to be a compelling area for the Bulls to buy what they think is "cheap" stock (and they put aside logic and common sense about the long-term growth potential of the markets for the next several years). This is a very real possibility. There will be, at the very least, some "residual" buying Bulls still enamored of the idea of cheap valuations. That means that if you are in puts this morning, then this could be a quick, sharp move to the 7,500 area on the Dow, and then you would start locking in profits (in fact, you would want to lock in a little of the puts early and bring your stops to break even). Some Bulls may try to step in around 7,500 or a little before - because "that's what we always do."

As for the next several days, if we don't see a really strong snap-back day (like November 21) then the market is probably headed towards the low 7,000's (7,197 was the Bear Market low in 2002), which isn't a pleasant thought, but probably a reality. So much for those inexperienced Fund Managers who bought the market so hard in the last hour on Thursday.....I know I keep saying it, but what more can I say, all of this keeps playing out right in front of your very eyes.....

9:00 am MT: Intra-day Update: The Dow (market) hit a pausing point at 7,554, which was a little early (just as I speculated). However, price action is dicey at best right now, and I speculate that we will see another leg down intra-day.

Here is a 15m chart of the Dow showing a Bear Flag forming:
(click on image to enlarge)

The market is still at risk for the drop to 7,500 today. For a second stage of puts, I would rather see the Bear Flag fight it's way to 7,650 - 7,675, just because the market has already had a huge drop this morning. If you are in puts right now, you should have scaled out of a little already, and the next leg down would be the signal to scale out of a lot of the rest. We'll see if the Bulls step in for a Beardicat Zone buy - job.....If they do today, I suspect they won't even try until a little later in the day - after they think most of the waves of selling are done intra-day.

Here is the chart of the Banking Index with the Descending Triangle I warned of on Friday (in VC). You can see the break-down happening today. This was just what I was concerned about on Friday:
(click on image to enlarge)

The market is staying in a bearish Channel on the 5m charts, which is at risk for another leg down in the next little while. We shall see.....

10:45 am MT: Intra-day Update: The market is trying to base a little bit intra-day, so locking in about half your put positions is a good idea. I still speculate this will slough off again intra-day, but a move above 7,650 on the Dow will now open the door for a possible test of 7,700 later in the day. So as long as the market stays below the 7,650 area then the puts are still in play. A move above 7,700 intra-day would be my drop dead area for puts and then it's off to no-man's land until the close.

11:19 am MT: Intra-day Update: This is the most likely point so far intra-day that the market is now ready to drop to 7,500. If 7,550 doesn't hold in the next couple of minutes then the next leg down will probably come quickly.

The Descending Triangle on the 10m chart is very close to breaking down, we'll see what happens next.....

11:37 am MT: Intra-day Update: Remember to keep this all in context, we are likely to see another leg down intra-day, but he market is also pretty crispy intra-day, so if we get the leg down then it will probably be quick, sharp, and then done. In addition, A move above 7,600 - 7,625 right now and we go back into consolidation mode for the time being.

Note: There are a lot of Bearish Kicking patterns in Energy and Commodity stocks as well as the selling in Financials today. Even Tech (like the $SOX) are in Kicking patterns. It's a pretty nasty day for sure.....

Market Oozes in to the Weekend

Pre-market futures are flat to up slightly as the Bulls try to build on the Hammer from yesterday. The Dow was headed for 7,500 when the government threw a news bogey at the markets in the last hour yesterday, which traders bought in to and sent the market back up in a Hammer. The net result is that the market has a higher probability of heading back up today - or in the next couple of trading days.

Here is a chart of the SPX showing the Hammer:
(click on image to enlarge)

Here is a chart of the SPY showing a Rectangle pattern forming:
(click on image to enlarge)

You can see the SPY (as a proxy for the market) is looking like it wants to go up and tap the 87 - 88 area again. A drop below the 81 area (or a little lower) means the bounce has failed and the market is probably headed lower.

If the SPX (and the market) have a stronger move this morning, or throughout the day, it will still probably at least pause (or not make it past) the 845 - 852 zone today.

As far as the news bogey goes, remember, it doesn't matter what logic and reason tells you about the substance or effectiveness of the announcement, it only matters how Big Money is reacting to the announcement. I've talked about the desperation on the part of the Fund managers the past 4 months, and it was never more evident than yesterday. So ignore common sense and go with the technical move, which is up right now. Remember your trigger points for a technical failure, and as long as the market builds off the Hammer, look for an upswing to short-term resistance. Because this is a three-day weekend coming up, don't be surprised if the market goes flat in the afternoon as traders ooze their way into the weekend.

12:00 pm MT: Intra-day Update: A Reverse Head and Shoulders is forming on the 60m charts of the SPX (market). The troughline or resistance breakout area is 837.50 - 840, so a clean break of 840 opens the door for a continuation of the upswing (on the daily charts) to 850. We might not get it today, but the Bulls are still trying to build off the Hammer from yesterday. It's about now that I expected traders to kind of ooze their way off in to the weekend.

Here is the 60m chart of the SPX:
(click on image to enlarge)

We'll see if the Bulls stick around for the fight, or if everyone takes their ball and goes home.....

P.S. The Ten-year Yield is actually up today, and mortgage rates are unchanged from yesterday, so the bond trades don't seem to be quite as giddy about the "announcement" as the stock traders. Usually selling bonds is a signal that traders may be buying stocks, but the two markets have gone their separate ways the past 4 weeks.

2:00 pm MT: Market Wrap: Ooze.....how's that for a wrap?

Market Rolls Down

Pre-market futures down this morning on a couple of earnings reports. When Retail Sales was announced as better than expected the futures came back a little. In addition, Weekly Jobless Claims, which is the most important number of the day, came out worse than expected. Initially the Bulls acted like it was a mini-party that the Jobs number was only slightly catastrophic (in their minds), but eventually they realized that continuing to lose over 600k jobs a week is going to have a negative effect on their "quick recovery" hopes. As a result, futures faded off again and the market is probably going to gap down at the open.

The price action on yesterday's pause was a Rectangle on the intra-day charts. The gap down at the open will take the market about half-way down the Rectangle, but not through support at 7,850 on the Dow. A drop below 7,830 or so will raise the probability for a leg down to 7,750 intra-day, and open the door for a move to 7,500 eventually.

Here is an intra-day chart of the Dow (15m chart) showing the Rectangle (blue lines):
(click on image to enlarge)

Here is a daily chart of the SPX:
(click on image to enlarge)

A move back above 8,000 on the Dow and the 15m chart Rectangle morphs into a Triple-Bottom and I'm standing back from puts. A move above 8,100 and I'm contemplating calls, even if I don't pull the trigger right away.

If the SPX drops through 820 it has a probability of fading off to 805. The Dow and SPX are not much in synch with each other right now as far as price points go, so I'm tending to favor price points on the Dow and daily chart patterns on the SPX. So the Dow numbers I wrote in the last paragraph are driving my decision more than the SPX. The problem that I have is that KO announced earnings this morning and is up 3% pre-market, which will give the Dow a bigger boost than the overall market.

My short-term bias is still to the downside, and as long as I don't go above 8,100 on the Dow and 850 on the SPX it will remain to the downside. However, a move above 8,000 on the Dow and 840 - 845 on the SPX and I'm pulling way back on puts and re-assessing for whether or not my drop dead areas hold.

Pre-market Update: I just checked the futures and they are continuing to fade off, so it looks like the gap down at the open is going to be closer to the bottom of the intra-day Rectangle. This may be the day that leads to the drop to 7,750 (minimum) on the Dow.

Therefore, I'm still looking for 7,750 (and eventually 7,500) on the Dow as the higher probability scenario, we shall see.....

12:00 pm MT: Intra-day Update: The market gapped and popped a bit this morning (after testing 7,725), which wasn't out of the ordinary for the feisty (?, hopeful?, the market is oversold?, please oh please?) Bulls. I picked off some puts right near the intra-day high test of 7,850 and have been riding them down through the mid-day. So far I'm up about 13% on the puts intra-day.

There's not much to do but let this ride. I'm willing to give the puts a chance since the Dow has entered the void between 7,850 and 7,500. I will probably lock down a little of the puts back in the 7,725 - 7,750 area (if we get there in the next little while), but I'm going to keep some of the puts to see if the ride down continues.

We may get a bullish reaction down in these areas since the market has been very reluctant to stay down in the lowest regions of the Beardicat Zone for very long - hence the profit-taking on a couple of the puts, but I'm still open to the possibility that this ride continues on down to 7,500.

12:17 pm MT: Intra-day Update: The market just bumped up a bit, so the Bulls and Shorts are not going to let this go back down to the lows of the day (if we do see the lows of the day again) until later in the day. It will be interesting to see if the Bulls toss in the towel in the last hour and the market sells into the close. If we don't get a weak close, then I don't want to hold any puts overnight. If we do get a weak close, then I am going to hold about 1/3 of my puts overnight.

12:44 pm MT: Intra-day Update: Looks like that bump was just a goofy little head-fake. The market took a nose dive right afterwards. I'm guessing it was either an amateur Fundy or a nervous Short that caused the bump. Whatever the cause, when the Dow hit 7,730 I locked in part of my put profits for a 15.5% gain (so far). It looks like 7,725 might not hold, so I will sell a little more of my puts on the next leg down. My next intra-day target is 7,675 to take a little more of my profits.

12:53 pm MT: Intra-day Update: 7,725 didn't hold, so down we go.....

Market Wiggles Early After Big Drop

Pre-market futures are running along the flat-line this morning after the immense sell-off yesterday. The market is due for a consolidation - for at least a few hours - after the sharp price action yesterday. There are no substantial catalysts today, although earnings from AMAT and CS will get some news. Tomorrow will bring two economic reports, Weekly Jobless and Retail Sales, with the latter probably getting more attention than it should from the news.

Yesterday's price action on the SPX played out right to the support area that I drew for you in the 825 area. This morning the SPX is due for a test of the 835 area and perhaps a double-move back to the 840 area.

Here is a chart of the SPX:
(click on image to enlarge)

Here is a chart of the Dow:
(click on image to enlarge)

I am looking at a wiggle today as another put buying opportunity. A move above 8,100 on the Dow would be a drop dead area that ends the puts swing. If the Dow does roll back down and drop through short-term support then I expect the first pause at 7,750.

The Dow is at risk for a drop back down to the 7,500 area, at which point I expect a "lecture" from a political leader of the bailout that goes along the line of "stock market investors and fund managers need to stand shoulder to shoulder with us in preserving the financial system etc. etc." Translated that will mean, buy stocks even though you think they are going down because it's your patriotic duty to protect the economy.

I'm brining up the possibility because if we do get an implosion down to 7,500 you need to be aware that it has been the m.o. of the government to throw a news bogey at the market every time it looks like we will get a catastrophic sell-off. That means if you are playing puts and we do get a sharp drop, be ready for the possibility of a news bogey designed to stop the selling in its tracks. One other thing, keep comments - if you have any - regarding the possibility I've just outlined above fairly benign, I don't wan't to turn things into a political discussion here, I just want to keep you prepared for catalysts that can affect your trading.

Market Sells Off After the Announcement

Pre-market futures are down considerably ahead of the bailout announcement this morning. There are really two main reasons: one is the current upswing is simply at a probability point for a consolidation, and the second is the "Bailout Bulls" are coming to their senses and realizing that the government is not the fundamental catalyst for economic growth. It is possible that the bailout announcement at 11:00 pm ET will put some fear in the Shorts, which could cause some covering and a bump, but it's likely that the market is having one of those "reality check" days where it realizes that no matter how much it desperately wants a big, robust secular bull market that it can't just manufacture one out of thin air (or hot air if you count politicians).

Here is a chart of the SPX:
(click on image to enlarge)

The SPX is set to test 860 fairly soon after the open, which is the tipping point on the morning. A move below that area and it's unlikely that the market makes it back to new highs above 878. The SPX would need to move above 878 for the Bulls to signal a probable continuation of the current upswing. So a move below 860 and I'm in consolidation mode and looking at the current upswing as pausing at best and rolling over at worst. I would be interested in puts only if the intra-day formations were good signals, but a move below 860 does open the door for a drop back down to 852, which would be an Evening Star Reversal, which in turn would open the door for a drop back down to 830.

The Naz has been leading the current market rally, and you can see the upswing is ripe for consolidation.

Here is a chart of the Naz:
(click on image to enlarge)

It's always possible that the Bulls get hyper, and the Shorts get wild and crazy, and when the market dips to 860 and then Bottle Rockets past 878, so I always like to keep an open mind. If we get that kind of intensity intra-day, then I will take it as a very strong signal and look to play calls the next day or two. Otherwise, I'm looking for consolidation today, and a possible rollover in to a potential Triangle type of consolidation on the SPX.

7:33 am MT: Early-day Update: After seeing the open, the highest probability scenario to me right now is a drop to 852 on the SPX. It doesn't mean it has to happen, but it's likely to happen. A 15m candle close below 862 would be a confirmation - and probably leg the market down to 857 - before an intra-day pause and a decision by traders to see if they sell it down to 852. It's always possible that the Bulls get excited and take things back above 878, but I'm still looking for that consolidation day as the probability outcome.

9:15 am MT: Intra-day Update: The SPX did drop to 857 (856.22) as I speculated and then paused. The next leg down intra-day took the market beyond 852 and down to 846, where the next pause is happening as I type. The Evening Star Reversal is forming on the daily charts as I speculated. The market may not close and confirm all of this, but the likelihood of an intra-day recovery is pretty low.

I "paper" traded some nice SPY puts early out of the gate and during the ensuing wiggle, and scaled them out into the parabolic drop on the 5m charts. It was a nice 12.5% gain in just 75 minutes. I will look for more potential opportunities if price action shapes up nicely after this next pause.

Oh yeah, and then there was that "bailout" announcent thing.....a real life-changing experience.....

11:25 am MT: Intra-day Update: The SPX hit 830 right on the nose, so we'll see if this is the next pause point intra-day. I traded two more sets of puts after the first wave for another 20% gain intra-day. At this point I'm looking for a longer consolidation, so I'm out and watching for the next set of price action. The SPX could still hit 825 today, but a pause off of 830 is what I'm looking for right now.

11:40 am MT: Intra-day Update: There's the bounce off 830. Price action is slowing to the downside, so this fits right in with what I was speculating and that is a bit of a longer consolidation in this area intra-day. It may be more than an hour before we see any new lows on the day if we get new lows (down to 825). For now, this has been a great day for puts, and it's probably mostly done in this area.

Bailout Announcement Gets Pushed Back

The Bailout Bulls will have to wait another day.....The announcement (and we're all holding our breath) has been pushed back to Tuesday. The Bailout Bulls aren't too happy about the announcement about the announcement, so pre-market futures took a bit of a dip. Most of the calls you and I locked down on Friday we can now get cheaper this morning.....as usual.....

The Double-Bottom type of pattern that the market (SPX) has been forming is pushing right at the trough line. I won't be surprised if the wiggle we get from the "disappointment" is short-lived and the ever enthusiastic (desperate) Bailout Bulls break out above the short term resistance.

Here is a chart of the SPX:
(click on image to enlarge)

A breakout above 875 would open the door for a move to 900 - 918. A false positive would be a drop back below 850, which would be my last drop dead stop for any calls. As always, we shall see.....

8:30 am MT: Intra-day Update: This market looks like it's headed towards consolidation for the next few hours. The leadership is coming primarily from Agriculture/Chemical and Energy and those areas look a bit toppy. The market will need some new leadership to break the troughline of the Double-Bottom, even if it means short covering in Financials.

Watch the 60m chart on the SPX. A break above 871 would open the way for a move to 878 and a push for a breakout.

8:50 am MT: Intra-day Update: The SPX did push through 871 and looks headed towards 878. We'll see if the market can build off of this. Things look a bit extended on the 60m charts, so I'm not looking for more than 878 at best right now before the market needs to gather itself. A powerful breakout would be nice, so I'm open to the possibility, but I'm going to be a little cautious intra-day (not so much on the daily charts) at the 878 area.

9:45 am MT: Intra-day Update: Just as I speculated, the market popped a bit and got too toppy and came right back in to the consolidation on the 60m charts.