I might expand upon this on further research over the long weekend, but for now I need to point out a few things.
My initial feeling is now looking to be wrong, which is sometimes dangerous to ignore your first intuition, but have to go with what I see.
In my last post, I felt we were looking at putting in a bottom in this turn date period... the 6th-15th.
This is a tough call now.... we COULD have put in a bottom on the 6th around 810. Meaning we will have almost a straight up explosion well into the 900's on the SPX.... ORRR... we could be forming a top within the turn date period, which COULD be at heavy resistance around 880. In which case, I expect the top to come closer to the 15th and have a pin over 880 to drag everyone in and then start a real pullback in this ABC correction.
So... I LEAN SLIGHTLY towards us forming a top for wave A of the ABC correction, sometime around the 15th and somewhere around 890 as a potential intra-day high.
REASONS for thinking so;
1) the Wells Fargo news changed the game in the short term... news trumps technicals.. It will be difficult to have a real pullback here without becoming EXTREMELY overbought in the financials.
2) "Sell in May and go away" ... here's how I see this playing out.... We rally hardcore til the 15th or so... then start a pullback for Wave B of ABC correction. This drags in the sell in may crowd and causes a very fast and ugly rash of selling into early May. Then we reverse hardcore... and screw everyone in the sell in may crowd and head up into Wave C of ABC correction and power ahead well into June up to 950+ and potentially as high as 1050. This would ultimately cause the most people to be screwed over big time. Which is generally what the market does.
3) I don't think 810 was enough to be a "bottom" for Wave B. This market has been far to volitile. The VIX was still at 40 at the time of the potential "bottom" 40 on the VIX is nearly as high as the highest it ever got in the 2000-2002 bear market. Which btw, was one of the worst ever percentage wise before this one. Since the VIX measures volitility, I don't think that was enough to really whipsaw some people. It kept the shorts out of the game for the most part... but certainly wasn't enough to cause anyone who was long to give up on the rally. Wave B will end when a large percentage of longs think the rally is over.
So no charts again for this post... but I may have a few coming this weekend after some more research.
GL and goodnight. Enjoy the weekend.
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