11.03.2011 -- Looking like a B wave... but...

This is looking more like a B wave here, which would mean we are about to enter the final move down before yet another rally.

However, it's not dead set, the probability has just swung to the direction of a B wave.

If we were to tank extremely hard and fast tomorrow or Monday, big Wave 3 would still be on the table.

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Key Levels

Upside -- 1265, 1290, 1310

Downside -- 1229, 1193, 1180, 1120

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SPX Daily;

We are just underneath the top of that channel and just underneath the bollingers that are curling over. The MACD is still floating around extremely overbought levels of the last 5 years and the Stochs are on a sell.

But we rallied hard 2 days in a row.

What happens now? Either way, theres more selling coming in this move, the question is how much. As I mentioned, if this is to be part of the first 5 wave move of a big C wave, we need to tank and tank hard in the next couple days. We are set up for it here.. right near resistance and with volitility rolling very high right now. It just needs to happen.

If the selling doesnt come fast and furious, then it's most likely just a B wave with another strong rally coming that could make an attempt to last the rest of the year.

If this next sell off isn't impulsive and furious, i will be closing my short positions and stepping aside in anticipation of the coming rally.

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There's not a lot of other clues here other than volitility is obviously very high right now.

Jefferies today tanked 20% after the open and was halted twice. It then regained most of that loss to only 2% down on the day. Usually though, things don't happen like that for no reason. I suspect there are issues at Jefferies despite todays recovery and they could be yet another MF. Could be exposure to european debt or to MF itself.

Put JEF on your radar screen. If the dominoes start to fall and the firecracker chains start going off.. that could be what kicks off the decline of our big wave 3.

GL

CJ