Friday seems to have some very high odds of a short term low put into place with the move into the 1330 area on the cash S&P 500. The weekly chart below also shows a fairly decent reversal in prices and we closed the week out basically where we began which is quite a feat considering the heavy selling we experienced.
Now, as bullish as all this may seem, we need to keep all this in perspective and continue to treat all rallies as highly suspect and nothing more than a rally in a bear market. With this mindset in place, we need to watch the 1385 to 1400 area on the S&P 500 for a possible termination of a bear market rally.
Continue to use all rallies as a place to hedge your long term positions as we remain in the sell strength mode. Aggressive traders can look to purchase SPY call options at or near the open on Monday as long as we do not get a large gap up at the open. If we get this type of open then speculators will be looking to simply sell short or buy puts at the upside targets I mentioned earlier.