Even though CPI was above consensus, and even though consumer sentiment fell yet again, the market is rallying, up about 150 points on the Dow as of this writing.

Looking at the intraday graphs, you can see this rally is still within the context of a downswing.

In addition, the VIX, which fell sharply from mid-March to mid-May, has now hammered out a nice saucer pattern, implying an imminent upward move.

The market blasted higher today, rebounding from yesterday's fall, only to see the entire gain erased half an hour before the close. Regretably, the bulls got a little strength back, but the day's gain was a fraction of what it had been up earlier. As has been so often the case lately, I started the day way in the red and, having done absolutely done, wound up nicely in the green.

Yahoo has long been a puzzle to me. I've been using computers since 1980, online computers since 1982, and the Internet since 1994. In all that time, I've used Yahoo approximately never. I love Yahoo Messenger, but that's about it. Anyway, I guess a lot of people do actually use this thing (in spite of so many better choices), but the MSFT/YHOO merger was officially scuttled today. It's remarkable to see how, nearly a decade after the stock peaked, it's still down almost 80%. I'm using an arithmetic scale here to better illustrate the drama.

I noticed the $UTIL is starting to form what would be a sensational head and shoulders pattern. It might take months to complete, but a collapse here would align with much higher future interest rates.

Gold continues to weaken. $1000 gold was such a huge deal in March, but that seems like eons ago now.

I'm loathe to cast a bullish eye on a stock, but this battered beast looks like it has a chance, provided it stays above the line you see here.

Oh, and poor AMR. This graph shows 40 years of trading. Notice how the low in 1974 matched the post-9/11 low. Can you believe that in the span of 5 years this thing has gone from a lifetime low to a lifetime high and is on its way to another lifetime low? Astonishing.

Another "poor old" stock – Sun. This makes Yahoo look like a blue chip performer. This stock is down 96% from its peak. Poor Sun. Most of the Internet runs off Java, its creation, but it seems like such a loser outfit.

I've been wanting to short CNH for a while, but I can't find the stock. Anyway, this fantastic head and shoulders complete today.

Here's a fine example of a failed bullish breakout. It blasted from $63 to $84, and now it's back down to $51. Ouch.

Here's another beauty I just saw – ICE. It can be hard to short stuff like this, since it's down so much already, but this is a massive pattern.

Here's another H&S in the making.

As for LEH, I have traded this in ages. Unless this is headed for bankruptcy, I have trouble believing it is going to go much farther down than this. But BSC fell to pieces in no time, didn't it?

This has been a terrific week so far. I'm holding out hope for a good Friday to really round things out. See you on the other side of the trading day!

The equities market is stronger this morning, helped by strong retail sales and weaker oil. I'm happy to sit back and wait, since my observation is that the S&P is, on an intraday basis, simply retracing a very nicely-formed head and shoulders pattern. Doing nothing is often the hardest thing for a trader, but that's precisely what I'll be doing.

I read with great interest the latest report from Elliott Wave International. I know there are varying degrees of skepticism here about EWT, but I find it fascinating, and the reports from this firm are well-articulated. Some of the highlights from their latest report postulate that:

• We've got about 8 years of general bear market (both commodities and equities) ahead of us, with an "idea" bottom for commodities in 2013, for stocks (in nominal terms) 2014, and for stocks (in real dollar terms) in 2016.
• In those eight years, they project an economic slump more substantial than the Great Depression (I imagine people would take great issue with this point in particular).
• The crude oil market is in the midst of its final swing up, with a projected ultimate high between $160 and $189 per barrel.

In the broadest terms, the notion of a bear market until about 2014 has been the theme I've been working with. The dream, of course, would be to amass ample profits in the course of that bear market and be ready to convert into a (gasp) mega-bull in 2015 or so.

Eight years is one thing, and one day is quite another. And what a good day it was! As has become the norm lately, the day started off kind of bad, but things shored up, slipped down, and caught fire. I had a terrific and very profitable day in the markets, and my level of activity (that is, trading) was just about zero. That's how it should be.

All eyes have been on Lehman (LEH) lately, as it plunges to amazing new lows. The broader Broker/Dealer index is getting pretty close to its mid-March nadir, where BSC got blown into oblivion.

The Transports, which had been a source of worry for me even just a week ago, is fading fast as a point of concern.

I've got a relatively small put position on the NASDAQ market, and it is doing nicely. We seem to be in the clear on the $COMPQ for at least another 75 points.

As for the $NDX, the break beneath that trendline was prescient.

I used to trade the Russell constantly, but I've taken a break. This chart is getting so compelling that I might re-enter this market. This chart has broken down very nicely.

The one big index position I do have, puts on the S&P, is doing great. I think it would take a pretty big disaster to push it to new lows for the year. I'm holding out for the upper 1200s.

I just bought some SRS today in my IRA.

My COH position, which is ancient (weeks old!) for me, continues to do great.

I also like how DECK is finally starting to break down. Just like their product, bulls on this stock must be saying UGG!

AMLN is also moving swiftly away from its resistance line.

My puts on GOOG are doing great, and I'd start taking profits on this around $500. A big blow-up in the market would make me finish taking profits around $425.

Of the four horseman, I've got either puts or shorts on all four. RIMM is slipping away from what would have been a bullish breakout.

My old buddy ATI is also doing well, and I'm happy to wait a long time for this trade to fully mature.

CHTT is on its way to what I'm projecting is a much, much lower price.

I shorted HBC a few days ago, so far with good results.

And JNPR did very well; I think I'd close this one up in the low 20s.

By the way, take a look at a month-old post here to understand how fun my "smart charts" can be given some time. When you click the Present tab, you'll see how the stock or index has changed since the post.

And, with that, I'll leave you with a message from Spock.

­

When I was a little boy in the mid-1970s, Saturday morning was a treasure chest of cartoons and kids shows. The production values were awful (in retrospect, I think they must have had a budget of $500 per episode), but I was crazy about these shows.

Thanks to the wonders of YouTube, I can better remember my misspent youth. One show in particular, Shazam!, was a favorite of mine. This young man, Billy, and Mentor (that was the name they used), cruised around the country in their gas-guzzling RV looking for trouble. Billy would get advice for some poorly-drawn ancient gods whenever he placed his hand over this hemisphere (in the aforementioned RV) which blinked with lights. It was awesome.

Relish in the glory. And remember – – don't put a girl down just because she's a girl (errr, if I was to use Captain Marvel's actual voice, it would sound like: "don't put a girl down jusht becaush she'sh a girl.") Personally, I can't imagine a more blatant rip-off of Superman. But anyhoo……