S&P 500 - Nov 13, 2008

charts courtesy of stockcharts.com

What a day! How does one trade a day like this? A trader friend of mine says that if one needs to ask that question one does not need to trade at all. If you ask me, he is full of it.

Very strong outside day, huge volume, nice advancing volume, a 90+ point reversal, the works.

This morning I said the bearish scenario was just too obvious, and, boy, were the obvious bears handed a hard one or what? I also said the bullish side had been weak, but today the bulls mustered some mettle to quickly regain the lost battle ground of 850.

We are back to 912 level as major resistance zone.

But has anything changed? Not really, we are still range bound.

Let’s exercise some short term wave scenarios

There is a trend break and a lower high in VIX. That is a positive signs but does not necessarily mean we are out of the woods. Notice how the 850 level is being defended. Today might have been a bounce form oversold levels off some positive momentum divergences. Notice that MACD did not have a divergence to speak of.

Impressive as today was, it still is a trader’s market. 912 is the next battle zone, and the way 850 has been defended, its importance is now obvious – maybe too obvious.