Looks like we're in a bear flag or a rising wedge (close-up view). This pattern usually spikes higher and moves laterally toward the top of the flag/wedge and then falls off a cliff quickly. The volume should also be decreasing each day (regardless of whether it's a holiday week or not).

Doji day!

One must ask themselves if this rally truly has substance, or if it is another news item rally. The short-term significance of today is the fact that the candle neutralized yesterday's loss. However, there is still a lot of ground for the bulls to recapture. This requires sustained positive catalysts and I don't see too many of them. What do we look out for over the weekend?...

Bulls got killed again. This is probably the 100th+ time this year. Don't say that I didn't warn you either. If you're still "hoping", then go back to your corner and keep praying. We broke our consolidation low yesterday, and today confirmed a clean break with a major spike in the last half hour and cut through the 2002 lows. That rally we had? That was a really large bear flag...

During the neutral range, I was thinking to myself, "there are two options available for the market: 1) we form a long tedious rounded bottom, or 2) we form a very large bear continuation flag. #2 came really quick in the last hour. Over the weekend, I also stated that I had those two conditions that needed to be met.

We tested the lows for the $RUT, slightly for the $COMP, and not quite for the $SPX and $DJIA. The $VIX remains elevated, but the fear seems to be subsiding as it has not tested it's own highs (as of today). The indicator is still consolidating and a breakout is still possible as long as it hold the 20-day MA.

Looking at 3-day charts, these daily patterns are not very bullish at all. We are closer to testing the Friday lows. Intra-day I made use of the fib retracement levels during the wedge's progression, another tool to keep yourself from panicking. The very long neutral range was especially problem due to false breakouts and breakdowns.

A reversal, then another reversal, and one final reversal in the last half-hour. If you can't handle this rollercoaster and adapt to the changing environment, then you shouldn't be trading. Also, to someone whom I will keep anonymous, you should not be trading if you fall asleep during the day with open positions...

I found exactly what I was looking for, even the increased spike in volume. This was no surprise to me as it was bound to happen. I am up 14% today and up 42% for the month so far and 3 out of 4 of my students are up over 10% today alone after joining me in killing the bears (at least for a day)...

We are dangerously close to testing the Oct lows, and I'm not kidding. It'll be tomorrow and I expect some sort of bounce here. There's too much support for a no-support slice through. I also expect considerable volatility as the bulls and bears fight for control on an important day. We should also see some increased volume levels. Tomorrow will mark the 4th time we test.

I was at my local Chartered Market Technician (CMT) meeting tonight which is held once every 2 months, so I couldn't get my daily market action post out in a timely manner. This also means that I missed the highly anticipated CNBC show on high-class hookers. I was really looking forward to that, seriously, so someone tell me how it was.

Interesting day where I didn't think we would be fading the gap as far as we did. Regardless, we re-entered the consolidation range not giving a care about China's stimulus package. On a longer short-term view, we are forming a bearish flag after having failed the 20-day MA 3x. At this point, we are more likely to test the October lows than to breakout to the upside.

We're in a flag formation which is much expected after a -10% move down. Friday was an interesting day where we just zigzagged up and down forming a triangle for most of the day. And yes, we did have another WTF moment in the last hour of trading.

Prepare for tomorrow, because there are only two options:

#1 - We form a double-bottom right off the 900 level, despite the terrible Employment Situation report and we head up to at least 20-day MA resistance. The VIX fails the 20-day MA resistance and falls back towards the 50-day MA.

-or-

Well, I was in majority cash yesterday so I didn't feel the bite. I'm ready to go long again once we hit the 20-day SMA. Any break from that level, then it's 100% short for me. We gapped down today, but it was only -100 pts on the Dow, initially, and the fact that we weren't able to fill the gap in the first 30 mins was a big warning sign.