The sp500 currently has the appearance that it wants to bounce from current levels. My take is that we do not bounce and continue to go into full flush out mode as we reach the apex of volatility in the next few days.
My take is that the tape is currently showing a ‘running correction’ which basically means that the tape is disguising itself in the form that makes us think it wants to get a bounce going but instead is actually just in a zone where new buyers are being absorbed by slightly stronger selling. This type of action makes sense in the recent resistance zone we are currently in between 1343 and 1370.
I think we will move with faster conviction possibly as early as tomorrow May 15, 2012 as soon as the rest of the buyers are fully absorbed by new selling.
I am expecting very high volatility the next several days.