The sp500 is already trading at 1300 again. BestOnlineTrades.com a few days ago suggested that after the 1/28/2011 decline the market would snap back sharply and then would come the moment of truth.
The market has snapped back very sharply exactly as we have suggested and very similar to the manner in which the market snapped back at the April 2010 top. So now begs the question whether the sp500 on WEDNESDAY will have the strength to break to a new 52 week high OR get a violent reversal down again and close below today’s low. If it does that then it would be quite similar to what happened after the snap back rally in April 2010.
My early sense is different now. I do not think this market will be able to snap back tomorrow and continue this bearish decline. I am most likely going to have to switch back to a BOT Long Signal at 1303 tomorrow or higher. In the unlikely event that the sp500 does snap back down hard tomorrow then of course the long signal will be evaded. But for now my sense is that this market wants to bust again to new 52 week highs later this week.
It would be quite a significant event if it happens, especially in terms of the Dow Jones Industrial Average which would then be trading above 12,000. It is an important psychological trading level and if exceeded could send the market into parabolic trading mode.
It should once again be said that this is an extremely strong market in terms of its tape action. The question is at what point does very strong tape action turn into ‘mania’ where it reaches blow off top type proportions. It could be as I have written about previously that this type of top may come in the mid June 2011 time frame near the Marty Armstrong 8.6 Global economic cycle turning point date.