9:00 AM - Harry Reid came out yesterday and rattled what appeared to be a slightly bullish market (from 10:30 until the comments made around 2:30, the market was either rising to or staying above the 20 EMA) with a few short words summed up as political frustration and no new progress. Long term algorithms displayed an immediate negative response. The Volume was larger than initial volume and more than 3 times avg volume with pricing dropping more than 1.5 std deviations in 10 minutes piercing the lower BB. The subsequent volume was also elevated and price could not maintain any upside gained.

What needs to be observed here, is despite the Bullish appearance, there is pent up fear lurking. If this is what happens when Harry Reid Speaks, wait for Obama. He is consistent if nothing else in injuring the market everytime he speaks on anything contentious. 

There is support for swing traders at 140.33, 140, 139.11 and 138.78. Anything under that, coupled with a correlating rise in VIX and VIX:VXV ratio, which currently stands at .90 (warning level 1), suggests heavy downside to the market.

I am expecting to be holding my bearish position today. Any spike over 19 in VIX (not likely today as it is at 15.5 now), I intend to buy a VIX call option at the money.

Again, if the market rallies, and it sure can, it should at bare minimum hit 140 before rising. The market still has lots of believers in it.  Upside resistance is 142.10, 142.43, 143.90 and 144.22. If the market finds a way to rally, 144 would be an expectable target.

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