Just a quick comment-cleaner as our fearless leader is visiting the core of crime, graft and corruption today…
The SPX cloud chart looks like this as of 2pm:
That trend zone since the Devil’s Bottom low has most definitely been cracked, but we are way under the support/resistance areas of the cloud.
So I took a look at just how far the rubber band has been stretched, and we are 2.5 standard deviations south of the cloud. We haven’t been this far under the cloud since the week of June 28, 2010 (-3.6) and before that Feb 17, 2009 (-4.1), early November 2008 (-6.7), Late July 2008 (-7.2), Feb 21, 2008 (-5.3) – see orange arrows.
So the question I have is do we bounce like in the last two instances? Or mark time until the next puke, like in the previous three? I think the answer lies in the bull/bear debate: we bounce if this is still a bull, and drop again if we have seen a bear turn.
