09.25.2011 -- Fake break lower?

We may have a fake break lower here on our hands. We are either going to plunge very soon below 1102 or 1250-1275 is still on the table.

------------------

Key Levels

Upside -- 1151, 1178, 1213

Downside -- 1121, 1102

------------------

There's not a lot to this analysis, so here's the chart;

Basically, its key whether we can work our way up back into that channel or not.

If we do... the chances that we had a fake break lower and a failed 5th wave down get a lot higher. It would mean the first major downleg of this bear market is complete and we are about to start the first major countertrend rally that would take us up to 1275 or so.

If we do not... then we will likely finish plunging soon down to the low 1000's to complete the first major pattern down. Then the first major countertrend rally would begin.

I really think thats all you need to watch right now. We either reject that channel from underneath and continue the previous plunging or we manage to break through it and close back up in it.

It is IMPORTANT that we CLOSE convincingly back into that channel in order for me to feel the likelyhood, that this rally goes much higher, is raised significantly.

The futures tonight appear to indicate we are going to take a shot at it.

This week is also EOQ. Friday is the last day of trading for the quarter, so that immediately has me leaning towards this week having a bullish tilt and we manage to get back into the channel.

News trumps all though, we shall see.

GL

CJ