2014.04.09 Wednesday Update

SPX has bounced from likely trend line and price support around 1840-1846 and has now retraced about 50% of the drop, reached Caldaro's 1869 pivot zone and poked just above some key moving averages. I was actually a little surprised to see the System would have gone long at 1853 when 4hr candle resistance was broken with a bullish Score. VIX has fallen back to its Feb/March support levels but not yet back to its April lows. Yesterday started as an SOS day but that faded. Today is growing as a bigger SOS day. If that is confirmed at end of day and SPX can drop below the 50dSMA currently at 1842 or if SPX can gyrate sideways for a day or so, then the System could get neutral again calling for a short. Right now, bulls have an opportunity to seize control and the short-term technicals are no longer ideally aligned for a bear raid, but the intermediate-to-long-term situation and the possibility for a huge amount of long-selling below 1840 can still be enough to inflict a rapid drop to 1800ish or even lower at which point the technicals would likely realign bearish on the subsequent dead cat bounce. Bears likely need to defend the 1868-1876 area and bulls the 1837-1842 area. The battleground is narrowing and the clock is ticking on the consolidation and projected spending-lag bottom in mid-April, so a big 4-6% move one way or another appears imminent...perhaps starting in a couple hours or days. Good fortune.