Well our scenario number 1 is still alive and well, the high of the day was 922 SPX, a level I have been saying to watch closely. This market is obvously trying to shake out the weak money and burn both bulls and bears alltogether.
Thus the title of my post "TREAD LIGHTLY" if you don't have any positions, keep it that way. If you do hold and watch the 920 - 930 level until that is broken one way or the other stay the heck out. I have my SPY puts I bought some more at the close to keep my cost basis down. No futures for me yet until I see a more desicive move one way or the other.
My bias is still to the down side, I believe that we SHOULD (emphasis SHOULD) gap down on Monday and sell off should steadily continue into Tuesday and possibly Wednesday. BUT, unless I see a high volume rejection of prices at these key levels nothing more will I do. As the title states, at a pivotal time right now if we break 930 SPX with good volume we will continue on much higher. My first guess without having to really study the charts today is the 970 - 980 may be the next stop.
First chart is the daily chart I put together real quick, still having major computer issues and haven't had time to put together some serious charts. But this will give you a picture, we had approximately a 9 point range today which is really weak, volume was relatively weak as well, problem is there could be an argument for both sides using these numbers. Low volume could be bullish and that this is only consolidation for the next move up. Stochastic cross is bullish, MACD is looking like it is curling up, so you can make an argument for both sides.
Second chart is the 5 min chart of todays action only, check the high volume spike in the last 15 min (purple line). But still couldn't come near to breaking our high target and actually sold off and ended the day in the red.
Overall this is a tough time to be trading, I will do some more research this weekend at the market internals and different sectors and see if I can come up with some more evidence to support my sell off scenario.
Have a great weekend all!