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On Friday we finally finished the trading day and the trading week with SP-500 at 1389 which is a lower low the weekly chart. This 1380 area is also a 200 day MA for the SP-500 index. Hence one should expect some of bounce or re-adjustment of position usually on higher volume which is where we are in the current cycle.

We are now at the junction where market can bounce back heavily or can collapse and create a gloomy picture all over the place. I pointed out over the weekend to mentorship students that we are at the critical stage in terms of Stage Analysis.

As you can see in the below chart that in past we have bounced back from the 200 day MA in the summer and went to create new yearly highs and same type of pattern is setting up and if we get the same bullish move then we are looking at the new highs at 1575 on measured move basis.

Same thing can be said that if we dont bounce and fail here then another 80 to 100 point down move is warranted which will take us the the 1300 to 1285 levels on SP-500.

There are various levels of support on the way down. They are at 1370, 1355, 1320, and finally at 1295.  So we will have to just wait and evaluate one day at a time and one more week here.

For now we are hovering around the 200 day MA and that is acting as support level. Most of the blogosphere and investors are all concerned about the failure here and market has its own way to go against the majority of investors.

Also another thing to note today is that we had a DOJI type of signal or Inside day type of signal.  So any break of today's high and low and then any break of Friday's high or low would be the action signal in-terms of taking short-term positions.  

The only positive indicator for bulls is VIX.  VIX continue to defy the bearish more and bamboozle most of the traders who rely on VIX to give them a confirmation.

The VIX term structure that we talk is still slanted upwards that means bullish market.

VIX closed below 17 levels today at 16.68 but we did not see market close at the highs today. Hence I am still in the wait and watch mode here. Break of DOJI's high or low would the action signal.