That said, I have been expecting a powerful bear market rally for months now & this looks like it. Most likely it has at least another 5% to go before topping out and possibly another 15%.

Prices are seriously overbought in the very short term though and I am cautiously shorting in the expectation that we will see falls Friday & probably Monday. If I’m wrong and the S&P keeps rising, I would expect a retracement to 830 on the S&P within a week in any case, so I would expect not to lose money regardless.

If the market falls 5% or so over a couple of days, we could then see the next leg up, for a peak of 860 to 940 before April 10th. The market won’t rise continuously until then, there will be pullbacks and we look very overdue for one right now.

If I’m right then this will set up a hell of a shorting opportunity by April 10th, as the market could fall from there to retest the 750 level.

Even after that, this bear market rally may still have legs. In the longer term this market remains very oversold, having fallen a very long way in such a short time. The power of wishful thinking should never be underestimated either!

BTW great blog Chris. What will be the cost of subscribing?

emini and s&p cash have been loitering at the top of their trend lines for some time, with the cash looking especially like a scalloping top, and the upmoves have been so violent the past 2 days that they bulls can’t sustain this much longer. buyer exhaustion looks imminent, unless the bulls get some news or a new thesis.

i think the new moon today is fueling their optimism, too.