From Sunday Night's update: For Monday, we may see some early weakness as the short term technical's burn off the overbought readings. I am anticipating the bulls to step in and defend Friday's lows and believe we could close the day in the green. Early strength will find bears at every upside pivot. So a move up will come in fits and bits at first. Once they push past the congestion areas above, I am expecting a push to the 840 level in the coming weeks, with the 870 pivot in play.
Review of previous night's notes and today's tape: Monday was a complete flip-flop from what had planned. Instead of early weakness we got early strength. The early selling that was taking place with the PowerShares QQQ Trust (NASDAQ: QQQQ) gave us an early warning to bail on the open port trades. For the most part, they it was a minor hit when averaging the 2 trades. The Ultra QQQ ProShares (NYSE: QLD) was a little worse, with a 3%+- hit.
Our sentiment data registered a 1% bullish reading on the daily, which often results some type a quick rally that last 3-5 days. But we have to expect high volatility during this time. I can see a quick push up to the 775-780 area, followed by another push lower, taking out the November lows to wash out every bull out there. But I don't see us staying down there and I believe the break will be shallow. The 738-730 would make sense as it completes the abc pattern.
If they decide to open the indexes lower, I still see a short term low not that far beneath today's close. I would still expect a push higher to the 815-825 target area, which should be followed by the last leg down before the 2-3 month rally hits. The low for that leg down looks like it would come in around the 680 area. I see that taking place towards the end of March, but the decent down should start sometime next week, most likely from the 815-825 levels.
So we will have to stay in trade mode for the short term. One other possible roadmap that would fit, would be a push up to the 753 area, followed by that last leg down to 738/730 area before the leg up to 815-826. Whatever path they decide to take at the open, I am expecting a much larger push higher in the coming hours/days.
9 TRILLION IS ON THE SIDELINES AND EVERYBODY IS WAITING FOR THE “CRASH OF 09”. Be careful of what everybody is seeing and what they THINK is taken place!!
Profiling the "Herd”: In this section of profiling the "Herd," I let you know what is going through the general public's mind -- what they have been trained to do from the "smart money" and how the Grim reaper will play the most havoc to their accounts. Being the general public or the "Herd" is on the wrong side of the markets 99% of the time, it's important to know what they are thinking and feeling about the trend at all times so we can position our trades one step ahead of the trend change. 99% of the “herd” is in the bear's camp. Those levels don't last long and they will be shaken out real soon.
"Smart Money" Trend: In this section of the "Smart Money" trend I let you know what the Institutions were doing for the day and their buying/selling trend that has been in place for the last week. This is important information-as the markets will react to either the buying or selling volume they are producing. When we see the "smart money" fading the current trend in place, it gives us a heads up to either lock in profits -- or get in front of a trend change and build a position, against the current trend. The smart money started the day on the sell side, but quickly went into accumulation mode for the rest of the day. There were plenty of block buy hits during today's decline and there is a ton of buy volume stored away for the turn.
For Tuesday: We come into Tuesday long the ultra short QLD, SSO and DDM. If we see early strength, the bears may step in again to take out the November lows. I am not anticipating it to stay down there that long. A pretty big move to the upside is brewing and could very well start Tuesday and last into next week. Expect volatility and emotions to run rampant down here.
