More zigzags. Very complex patterns today. Particularly all hours on the e-minis. But it held support. So the market has indeed managed to tread sideways at about 869 support. The daily tick has corrected down and as EWI pointed out tonight, the RSI on the hourly is "resetting" to "neutral".
The one thing that really captured my eye is the SPX:VIX comparison is misaligned. The VIX has risen the past few days http://danericselliottwaves.blogspot.com/2009/07/vix-and-spx-out-of-whack.html yet the SPX has not dropped accordingly. Dip buyers.
So its reached the point where something must give way: either fear or price. And price has been stubborn so that would mean a big drop or "relief" in fear will signal an opposite SPX reactive move above 980 and a run onward to 1000 and maybe even a small bit above with some squeezing.
The VIX rise has meant traders are more uncertain where prices are heading short term. Its like someone who is scared yet doesn't run away. The SPX is experiencing a pang of fear yet the prices don't run south (yet). Eventually, that scared person realizes they are just ok, and they lose the fear and continue on. Hence the SPX may lose that fear and break on through above 980. Of course the opposite could happen: The scared person does eventually "wake up" out of his frozen state and runs away.
But the market's waves haven't yet signalled that it will turn south a bit. Today traced more of a wedging pattern that typically marks the ends of short term corrective periods. Regardless, the market cannot tread sideways for much longer between 969 and 982. Something will give tomorrow either way.
People at my work know that I generally am a stock tracker and I had 3 people in the last two days mention they wanted back in more or less or was thinking about it. We are likely entering the "public participation phase" from the rally from the March lows.
I'm still fairly confident we'll get that pullback to at least 950-956 not too long from now, however I am unsure from what price high that will occur from. Yes, I favored the bears a bit the past few days and I was generally correct: 2 red days (though small on the SPX). Now the price and wave action, and correction in indicators and maintaining support means that objectively speaking, it appears the SPX wants to pop higher. But sure thing it is not.
Good luck cause anyone entering a trade here has balls to play it either way and my hats off to you. I am not in a hurry. I'm a permabear afterall and actually hope we pop higher, because it will provide more clarity in a swing trade setup.