Well...back to the drawing boards? Maybe. Stops taken out at 182.95 and 185.00 (most of the volume was concentrated here) in a very thin market due mainly to Brazil being a 4 day weekend/holiday and thus no selling pressure. Open interest also suggested that there were more shorts that could be forced to cover - easy targets in a thin market. Still, this only changes my probabilities for the market breaking 200 this year vs next. I'd put them at 60,30,10 (Range between 150/195, above 200 and below 150, respectively). I still feel that we will see substantial selling pressure as the market approaches the 198.65 high and that, again, funds have gotten "top heavy". As I mentioned in the last post, the move off the high has seemed very corrective in nature. So, why wouldn't I argue for a buy if I thought it was corrective? Basically, for the likely, anticipated selling and the fact that it would have to be very, very bullish. The very, very bullish argument would call this the beginning of a wave 3 pointing to an initial target of 220/225. While I do see us there next year, I do not see us there now. Therefor, I still think we will consolidate in the wide range and that you can step in on the short side with a small position. Or be patient and look to buy lower, or if it is truly bullish now, then buy a break above the high.
Attached is the 60 minute graph again. It is pointing to at least further gains tomorrow. It bounced of the 62 % retracement (green bar at todays high), but it has momentum and a short term bullish 5 wave pattern unfolding pointing to at least 190 again.
Will be interesting tomorrow as Brazilians return to work to see if they start out selling. Given that they have sold well and are well capitalized, my guess they will take a wait and see approach - should provide for some more upside.
60 min:
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