If you had sold the strength early in the morning, there was over 10 S&P 500 points to capture.
The last 2 hours of trade ended up in 2 stop outs of trying to establish short positions, so all in all there was 7 points on the short side captured.
While equities have held up a bit better than I had expected, they remain in a very vulnerable position and this bounce we have had off the lows looks to be counter trend all the way. Thus the market remains in the sell strength mode.
Take a look at the two charts below as they show where we are now and also where I think the strength will run its course. 1528 on the S&P 500 cash is the most likely target.
One of the major tip-offs that this most recent rally from the lows is counter-trend came today as the market moved sharply higher right out of the gate and then proceeded to give all those gains back and more. While it did recover to the highs of the day, the fact that buyers were unable to keep the market up strongly after the open is the sure tip-off that lower prices are in the offing. If this move had been a rally in the direction of an up-trend then the market would have never given back its gains.
The other tip-off that we currently remain in the sell strength mode is the weakness in the hourly momentum off the lows. The market has really struggled to get where it is and that is not a sign strength.
So, to sum things up...... Continue to sell strength and watch the 1527-1529 area on the S&P 500 cash index for a sell short point. Look for one last push down to new lows below 1490 on the S&P 500 to complete the first leg down of this intermediate term decline. Currently I have a downside target of 1478-1480 for the end of the first leg down. This target may change dependant upon the final level this current rally carries to.
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