S&P 500 - February 24, 2010

The oversold levels in breadth and price got us a bounce. When an index bounces off a freshly registered oversold reading without lingering there, it is not acting very bearishly.

That having been said, the internals of the rise off the Feb 23 low look choppy and corrective. This is a 5-min chart of ES futures using 24-hr data


I can label it as impulsive if I try, but I think it is choppy. That does not necessarily mean market is going to collapse, but it can imply that index is just correcting the previous decline and more softness may follow soon.

This is a 60 min chart of ES futures


First off, this is 24-hr data, and, due to lack of volume is some ungodly hours of the dark, it may produce choppiness that may not exist on the cash index.

With that explained and out of the way, notice that I have 4 different labels at Jan peak.

They are all viable counts. That is how tricky market is at this juncture as bulls and bears are fighting it.

I am following the aftermath of Jan peak with 2 scenarios, but the other scenarios are as valid. Uber Bears, of course, have already decided the outcome and are projecting us in a massive down wave. I am not as certain and am just taking it one day at a time waiting for the market to tell me what it wants to do.

So far, bulls have had the upper hand. Bears had yet another chance to capitalize on Tuesday’s selloff and but could not do much with it and we bounced.

The bounce today came at less volume than the selloff of Tuesday. Breadth was good


Some shorter term oversold measures of breadth have been relieved somewhat


ARMS Index is also back to neutral


This may mean that majority of the shorts are already roasted and we may be getting into a situation where bulls need to bid on their own.

This is the daily I showed yesterday


Not much has changed. Index is still sitting on its shorter MAs and needs to clear the congestion zone one way or the other.

I still think that we have not seen the last of our mid-term downtrend. Regardless of what I think, traders may need to take it based on pivots and support/resistance levels. Longer term holders may want to keep an eye on the bigger picture


I think the weekly chart is quite clear as to what levels bears have to break to turn things around to their favor.

Support is at 1090 and 1061 (shorter term, bears should break these pivots to stand a chance). Resistance is at 1107 and 1133.

Long term trend is up. Mid-term trend is down, short term trend is up.

Have a Nice Day!