Another Picture perfect short term rally setup..

Couple of days ago, we had a picture perfect setup and we have the same today for another short term rally. This rally can pull around 100 points on SPX. But as usual we take some profits on the way and then have stops to protect ourselves.

 For people who follow Larry Connors RSI system, there is that 2 day RSI also in the extreme level.

Ticks started ringing the bells too.. when we got the breakout above that hourly doji..

Remain in Cash in 401k and IRA acocunt. Let the volatility subside before you commit long term capital.

Waiting for Longer term setup

As I said today, this is not a good time to deploy long term capital. Yes for short term bear rallies, you can deploy very strategically and bail out with profits or small losses but for longer term account, patience pays at this junction.

You want VIX to come down to 25 levels and cross below its 150 day MA. If you go back and study most of the rallies have started when VIX crossed its 150 day MA.

So patience is the name of the game. We will soon have our way..