Market Update - 10/13/10

We have broken 1173, we have broken 1178. Both of the key pivots that I expected the SPX to stay below have been taken out. The way I see it, if we take out today's high... 1200 might almost be a given. In order for this bearish wave count to stay in tact, we have to stay below today's high of 1184, in my opinion.

The bears have been pushed to the absolute limit here. There are a lot of bearish signs out there now. First off, this ending diagonal has had a HUGE throw over, which is bearish.

We need to quickly take out 1155 for the bears to take control. I would love to see it happen this week, but we might have to wait until OpEx passes over.

The second, and perhaps the most important bearish signal is the VIX. The low today on the VIX was 17.90. Anything under 20 on the VIX is a sign of major complacency, especially the way the market has been moving lately.

We had a couple closes below the lower bollinger band, and we seem to have a long green bar today, despite gapping down. The VIX is setting up to have a violent move up, which obviously means the markets should tank.

On the SPX daily, we have also crossed into the area of the April topping process. There is a lot of supply up here from before the crash, and there may be a lot of people who were caught long looking to get out.

The candle today isn't a very bullish one either. Close to a shooting star, but not quite there. A long shadow at the top is bearish though.

For me, seeing the VIX in the 17's makes me feel more bearish than I have been in quite sometime. Again, the high from today must hold. If it does, and we see some selling pressure along with a rising VIX, this market could see another big down move. 1184 is the big number for tomorrow, if we get there.

Charts of the day will be updated soon.