Did the bulls scare you? Well they scared me, just a little though, and by the close not much at all. The bulls broke the wave 3 channel on the SPX convincingly at the beginning of the closing hour. However, they got slammed back just about inside the channel by the time the bell rang as Obama gave yet more rhetoric and no meat right into the close. On the ES futures we are clearly back inside the channel as we head into the overnight and by all indications this still looks to be wave 4 of 3.
Despite all of the heavy volume whipsaw action today we remain basically in the same position as last night with the bears still (barely) in control of the wave 3 channel. The key lines on the medium and longer term remain for the bulls to defend SPX 741 and for the bears to hold the 800 trench that gave them so much trouble on the way back down to the lows. Any more up action and I issue a retreat and fall back to the 800 line before redeploying short troops.
The easy trade of the day was to remain short bonds. We traded down strongly all day no matter what was going on in equities and closed just a point above new lows for this down move. We now have a little more breathing room from the top of the channel which remains my stop out.
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