IS THE UPTREND OVER?

There was some panic selling early on as Standard and Poors basically said that the U.S. was on a path to a lower bond credit rating. Keep in mind that they did not lower the credit rating of U.S. bonds...in fact they affirmed the AAA+ rating. They basically said that if current spending policies remain in place, the rating could be cut in 2013. Today was a classic "sell the news" day. The VIX spiked up early on, but dropped significantly by the end of the day. I'm amazed at the people out there that want to use the VIX when it confirms their outlook, but dismiss it when it doesn't. I've heard many people say lately that the VIX is not a reliable analysis tool. I would agree if it is being used as your only indicator. If you look several indicators, it works very well. The market is vulnerable here, but I don't see today's news as being any worse than the news last month...and the market came back from that drop. From the bullish side, I see a possible inverse head and shoulders pattern forming on the Dow, S&P 500, and Nasdaq indexes. If this pattern holds, the market should start to move higher very soon. On the bearish side...the market rallied off of a very important support level today (1295 on the S&P 500 index, about 12020 on the Dow...although it didn't trade that low today..., and about 2705 on the Nasdaq). If the indexes break below these support levels, the market could have more room to drop. Another bearish sign is the early earnings reports. The market hasn't liked these reports. INTC, IBM, and AAPL will be big this week. If they fail to impress, it might be the ammo the bears need to push the market lower. I didn't see any patterns tonight that I really liked...especially with the uncertainty in the market. We'll see if things get clearer tomorrow.