Before I go into daily and weekly analysis in depth, I want to spend a second to talk about where we have come from and in general what we can expect.

All I can say is so far, we are mostly spot on the money, between the original bear market call, the drop to 140.5, the 1-3 day bump after that, the subsequent fall to 138.5, the test of the 200 day line, a large red candlestick this week, not diving over the 200 day cliff and the increased price volatility and unpredictability in bear country. For a month I have been heavily advocating shorting rips up until a couple days ago. Now, I am a ST Bull living in bear country, facing the danger, looking over the 200 day cliff and confidently jumping in.

Today started off with great anxiety, but climbed the wall of worry to roughly 1% gains in the SPX. President Obama fired his oratory torpedo, sending the market back down to it's start. We then skidded, climbed a little, and in the last ten minutes lost just enough to go under the 200 day, and that more critically important the 4 year lower channel at 138.58 that we had been watching. 

Yet sitting here tonight below my target marker, I am not worried much at all. Before I go on, let me reiterate, I do not and will not make my TA fit what I want to see. That is utterly pointless, unethical and I would never engage in that. I trade real dollars and follow my own advice. If the TA changes and I see something else playing out, I will be happy to exit my position, even at a loss. Pride is not why we trade and everyone is wrong here and there. Here are my reasons for my confidence.

The 20 day EMA is not in danger of crossing the trendline. Price has a 1/20th effect on pulling MA, and the MA has a 20 times effect on 'containing' price. Price can bob and weave. It can temporarily pierce important lines (although we all prefer that it doesn't), but until that 20 day crosses it, we can assume that small crossovers are still just fluctuations, not consensus. 

In the last couple minutes yesterday, the bears pulled some late day trickery taking us below that all important channel, and then again today in the last 10 minutes, they pulled out the stops. The market did not die this morning after last night's tricks and it will not die Tuesday morning either.

The thing is: the market does not win or lose at the end of the day. It simply goes into half time and plans the next half of the game. (which always starts the next day and never really ends) In football, your points at the end of the fourth quarter determine the winner regardless of who was winning mostly that game. In stocks, it does work some like that, but not completely. What we really want to see is what is the consensus, and a last second trick play does not negate 8 hours of differing action. As a side note, if anything, last minute pushes after the first few days in a strong move show they do not have much else to offer right now and are running out of steam.

That is what we have here. Today, we had huge volume rally and mostly pricing was up. While we all mostly blame Obama for the late day rout taking us to back to the start, most short term indicators had us at overbought conditions and the price action was getting lazy. I cannot day trade because of 3-day SEC rules in my unmarginable Roth, but I have to say that was utterly predictable, and could have been a nice quick hit. (I would have still bought back late today, even if I could have made that trade.) 

The important thing is we did not let it get out of hand. We only lost today's gains and still ended green. We landed near enough to the 138.58 line for my comfort level. In retrospect, this may be the best case scenario come Tuesday morning when the markets reopen. They are trying to make us stew all weekend about why the 200 day did not hold or that channel trend line. Experienced investors will look at the bigger picture, but there should be enough emotional traders thus triggering a gap down. This should likely cause a retracement that leads back upwards. I prefer days that start slightly down if I am in a bull swing. 




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