Today would make a perfect "kickoff" day for an upleg - perhaps a [d] wave in a triangle. At least thats what the market internals suggest as the up volume ratio ended the day at about 89%.
We have a possible roadmap for a [d] wave in a triangle:
P DOWN COUNT PERSPECTIVE
There is not much to say at this point other than if this is P down, then this day needs to be reversed with extreme prejudice and closed under as soon as possible. With many Intermediate time sentiment indicators having hit some extremes, that is a tall order to ask.
But its possible. During P down in 2007-2009, days like these were reversed all the time.
Note the multiple layers of resistance the market has to deal with. Today was bullish, yet it was all "resistance-free" space so-to-speak. So P down certainly lives unless the bulls can sustain today's advance and begin to repair the serious technical damage inflicted over the last few weeks.
A P-friendly down count.
YOUR TYPICAL KICKOFF DAY?
This looks like a typical bullish "kickoff" day that we have seen numerous times during P up. Conventional wisdom is that we are again seeing that type of day again and all one needs to do is buy the best "dip" spot.
RESISTANCE CAN BE A BITCH
Resistance has set in at multiple layers and hardened a bit. However we have seen as in 2010 how these layers can be "conquered" and re-taken. One would assume it can happen again.
IF P - SOMETHING DIFFERENT SHOULD HAPPEN
A true character change in the market would be if this kickoff day was reversed to the downside and soon. Would that indeed be the contrarian play at the end of day?
SHORTEST-TERM SENTIMENT AND TECHNICAL MEASURES ARE NO LONGER OVERSOLD
Today corrected the short term extremes. We are still left with oversold longer-term extremes on certain things, but if this is P down, they can get squashed even more.
We have a window here for P to kick the door down and scare the living crap out of every market player. So far there has been no panic the VIX never has even touched 20 on this pullback from the 1370 high.
I showed the STEM model http://4.bp.blogspot.com/-YbO_doB-KrE/TfaR1KD5tdI/AAAAAAAAJUI/TIiPDkY5-Xk/s1600/STEM.png last night, and if it intends to sell to an extreme, we have a lot of room on this to go. (On the flipside - if we have a triangle - the STEM will not go negative extreme here - duh)
IN THE END THE MARKET IS ALWAYS RIGHT
We have 2 possible paths (and to be sure there are others but I am concentrating on these two) and one count may make the other look downright silly very soon.