09.13.2011 -- Back in the bollingers

Update : 6:09 p.m. -- I'd also like to mention 1 important occurance today. The transports. The trannies were up 3.64% today. That significantly outperformed most other major indexes.

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We've quietly climbed back into the corrective channel and back into the bollingers on the SPX daily chart.

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Key Levels

Upside -- 1184, 1206, 1235, 1250, 1261

Downside -- 1162, 1154, 1121, 1102

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I'll start right off with the SPX daily chart;

As you can see, we are back into the bollinger bands now today. Yesterday we had a key reversal and ended back in the corrective channel as well as posting a hammer reversal candle.

The market sure doesn't make it feel like it's going to rally does it? Opening futures were -12 this morning and then that quickly changed into the open. During the day was muddling around w/ a constant feeling like we might tank and then finished on a bit of a positive note.

This market will eventually die, but it doesn't look like that's in the immediate tea leaves. Just as I mentioned yesterday, I'm thinking either October it starts or January it starts. They may attempt to rally this market through Xmas even further than I thought, but I'm not really sure yet. The signs will reveal themselves though.

Right now, the signs point to some buying. Never underestimate the power of end of quarter buying. Those 401k statements need to be shored up so everyone isnt jumping out of the market at the same time. There is exactly 13 days of trading left until EOQ.

I did take a small long position this morning pre-market, we were playing with the bottom of the channel again and I felt it was good risk reward spot heavily tilted in my favor. If we took out yesterdays low, I would have dumped it.

I will have a very testy trigger finger with it... News can show up out of nowhere and change the picture dramatically in this type of environment, but I do think we are going to switch over to better sentiment where it will take some really bad news to derail things for a bit.

Looking further into the future.. somewhere from 1260-1300 is going to be an excellent spot to short this market and is what i'm really waiting for. After that comes a decline of potentially epic proportions. Sentiment will become worse than the bottom of the last bear market.

While Greece is giving the world headaches, I expect sometime soon it will become obvious that Italy, Spain and possibly France are cancers that are much much more dangerous.

GL

CJ