I have to switch back to a BOT short signal today. I see a triple M pattern on the MACD histogram and a similar pattern to that which existed before I issued the massive BOT short signal way back in late July 2011.
The MACD histogram sell signal is not confirmed yet however.
I am seeing a number of different areas of weakness in the market that should be a major concern for any longs. Copper is breaking down bad today and oil as well. I indicated in a previous posting that I wanted to watch copper carefully as it was presenting a similar setup before the major drop in 2008 and seems to be setup the same way now.
I still have to give the bears the benefit of the doubt right now despite all the possible ‘news risks’ that could happen this week (ie. Fed meeting).
We recently saw a multiple 5 day extended super rally which looked quite bullish, but then I have to revert to the fact that we are probably still in a major bear trend and bear rallies have a reputation of being dramatic.
This multiple 5 day rally reminds me of the late June 2011 rally that got everyone very bullish on the market and excited.
What is worse for the bulls on the recent 5 day rally is that it maybe was already the Fed rally and now we can resume DOWN.
The recent rally may have been the CATAPULT that will shoot this market down.
The tape looks ugly to me here and I think we are getting close to going down again here. Have to give the odds to the bears here. They have had some tough sledding but ultimately I think they still could get the job done.
Also notable is that the VIX STUBBORNLY refuses to break down and drift down into nothingness. It gives me the sense that despite its wavering it wants ultimately to rocket higher.