The bears took the short-term initiative back from the bulls with a sell off into the close that broke the wave 4 momentum. By all indications this is now wave 5 and wave 5’s can truncate at any point which means you have to be on your toes and be ready to issue a full retreat if the bulls start to mount an offensive and bring the heavy ammo (volume). The next retrace impulse is likely to be the start of a larger degree retrace wave 4 and I'd expect the bulls to make a strong run at re-testing the 800 trench on that move.
Bonds continue to drift lower even in the face of lower stock prices. It's imperative that the bond bears take out 125 or the bulls may have a double bottom to work with and we might get a flight into bonds for a few days. As long as the primary channel holds I'm going to continue to look to short bonds playing the spikes. The bears might have turned almost 30 years of bullish momentum in bonds back on Dec 30th of last year and shorting the long bond will be a good trade to have on this year...at least until the primary channel breaks.
I soon as I saw that phrase, “bears back in control,” I got Thin Lizzy going in my head. Just substitute the word BEAR for Boys and sing along!
Thin Lizzy - The Boys Are Back In Town: