09.20.2011 -- Today looked bearish..

I'm significantly more short term bearish today than I was yesterday. Today started out how I expected today to go, but then we put in a short term double top and closed with an ugly candle back down into the bollinger bands on the daily.

We can still see 1250 or higher before a big move lower, but it is now possible that 1223 was as high as we are going to get.

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Key Levels

Upside -- 1208, 1223, 1250-1269

Downside -- 1189, 1169, 1154, 1121, 1102

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Here's the chart;

SPX Daily

We logged an ugly candle today. That looks like a reversal hammer which closed back into the bollinger bands.

The question now is whether we stay in this wedge after some selling and then head back up for one more surge, or if this rally ended today.

The good news is that we have this wedge to watch and all our key levels. If we break this wedge south, I put a very high likelyhood that we will head much lower and take out 1102 on our way to at least 1040. The bad news is that this market just got significantly more difficult to get short and catch that move. I think I have no choice but to wait for the wedge break and short that if it happens.

There are 8 days left of trading until end of quarter. I have to think that they will attempt to close the quarter on as high a note as possible, which is honestly the only thing that makes me believe there is one more surge left in this rally. Otherwise, the technical picture looks much worse today.

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Now, some more reasons why I am much more bearish today. Keep in mind, I'm very long term bearish, but I felt like the market had the juice to get into the upper 1200's, and still might. But today really is putting a big question mark on that possibility.

Here are 3 more charts today.. The momo stocks (or if others prefer, "high growth" stocks) have been having a field day lately and although I've seen these longer term patterns, they just were not complete and they kept charging ahead. Today though left some ugly looks to some of these and I would like to share.

Chipotle (CMG)

That's ugly all the way around. Ugly candle, ugly double top. It's just plain ugly. This chart does not bode well for Chipotle in the near future.

Amazon (AMZN);

Ugly candle, ugly megaphone top. And while CMG was only a 1 month double top, this is a much longer pattern. AMZN also looks in trouble here in the near future.

Apple (AAPL);

Another ugly candle and ugly pattern. I don't see how you could view this chart as bullish. This to me looks like Apple is going to have quite a drop back down to the low 300's coming up here soon.

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These stocks appear to be putting in tops. These high growth stocks that have been marching ahead in the face of everything else that make up large % of holdings in so many funds, when they rollover it will be a sign that this entire market could be teetering on a cliff.

We need to continue to watch these stocks and watch the wedge in the S&P. If these growth stocks rollover and the wedge breaks, that very drastic decline i've been talking about will be beginning.

We can still take one more ramp up to 1250-1260, if it's going to happen though, I expect it to happen in the next 8 trading days.

As I have been, I'll be remaining flat here until we either get to the mid 1200s or the wedge is cleanly broken on a close.


GL

CJ