S&P 500 - Dec 2, 2008

charts courtesy of stockcharts.com

Yesterday, it seemed like there was nothing other than the closing bell that could stop the slide in S&P. Today, it seemed like nothing could push it further down. Market behaves like a manic depressive, quickly swinging from bouts of hysteric energy to depths of depressive melancholy.

Breadth was positive, and volume was almost the same as yesterday. Technically, based on two of my favourite indicators, the McClellan Oscillator, and the Summation Index, we have a buy signal. I shall emphasize the technically part of the signal, and also note that these are somewhat slow indicators, so if I use them, I will have to give the market some room to play.

The short term wave count is still open to multiple scenarios, here are the two I like to keep on my chart desk

As we can see from this 15-min chart, the rise from November low can be counted as 5 waves. Yesterday’s drop could be marked as wave 2. For it to be valid, index has to stay above 817-818. If it can climb above 900, especially if it can capture 912, chances of Primary A having been seen increases dramatically.

I think the current short-term levels present a low risk opportunity for me to lightly dabble the long side of the market. I am seldom resigned to my thoughts and wishes, and usually of my levels are broken, I admit defeat and run for cover. So, for me, the 817 area has to hold to be interested in the long side for the short term.

One more reminder: S&P is yet to establish an uptrend, and until then, I remain quick to cover loss or take profit. That is another way of saying I still regard this as a trader's market.