Market view

Markets did a surprising rally to me I must say - did not expect Tuesday to be a bullish day in my book and we started up with a big 3% rally - but after we got to 1190 level we did see a sharp reversal at the end of the day and made a possible "reversal" candle and reversal bar. The thing is that the daily chart does still not look good and if this was a bottom its one of the most ugly bottoms I have ever seen :-)

I still believe SPX to see below 1100 and targets 1000-1050 on SPX. We might first get it in the first week in October but lets see on Wednesday as this will give us a better clue....

The bulls needs to break above 1200 and especially 1220.... and the bears needs to push us below 1120... so we are still in the same boring range like moving in a roller coaster.... wow.. what a mess.

My thesis still tells me that markets is going to see below 1100 and price target 1020 SPX - so I stand by this still....

One thing I will mention which worries me is that the euro has a bullish MACD divergence - so this could "help" the markets rally up further as the dollar has a bearish divergence now.

I called for the dollar to rally big before September and we saw this - now we have a bearish divergence so it looks a bit like dollar could drop and therefore markets could indeed rally....

Its hard to say - but lets see what happends today - I remain long TZA , DRV , EDZ and should probably have sold some days ago , but my thesis did tell me to hold - so still holding.

Markets dit make a daily "black candle" and USUALLY this is some kind of top at least recently.... so if this is another black candle top then we will start on Wednesday plunging down......

The VIX made a hollow red candle bar which is some kind of bottom bar - so the VIX may move up with the markets beginning to move down again......

Usually the candlestick of a red hollow candle is bullish reversal and bottom candle - and the black candlestick or white bar is a bearish topping tail.

Conclusion:

Holding all my shorts - I still beliewe we make a move below 1100 with a target of SPX 1020 area which will fulfill the bear flag pattern target. To me markets seems like huge short covering process why we rallied , but looks like big boys selling into it.... as we saw the last hours.... big selling pressure......

We are still in a downtrend if you pay attention to Russels and other indexes - so bulls need to show strength above 1200 then good chances we will go a lot higher. SPX 1190 was a 78.8% fib retracement of the drop we had last week....

Remember however I still believe markets going to see 2011 BOTTOM sometimes either THIS week or sometimes first week of October which is next week. So be prepared for still some wild moves and be prepared with lots of cash IMO.