DOWN?...NOT JUST YET

The price action was bearish today as the market erased a 136 point gain to finish down 70 points. That is a 200 point reversal! At first I was feeling like we might skip the rally and just head down from here. That is still a possibility. I still feel like this market needs to be played to the downside. However...as I looked more closely at the intraday chart pattern, it looks like the rally might not be done just yet. There can be a time element with some of these pattern formations and I just don't think today's short rally was enough time. I still think we will rally up towards that 1100 to 1120 area on the S&P 500. Time wise, the rally should be done by around Monday of Tuesday of next week. After that, we could possibly see one of the biggest moves down. We could chop back and forth a bit in the next few days...kind of like today's move. The point is...if you made some initial put option purchases on the SPY, DIA, or QQQQ, you might need to be a bit patient. The good news is that if I'm wrong and we drop straight down from here, you'll be glad you opened up a small initial position. If we get up towards that 1100 area, I might start to recommend that you consider buying some more puts and increase your bearish positions. If we happen to move below Tuesday's low of 1040 on the S&P 500 tomorrow, we will likely be in the huge sell off and we might want to consider adding to our put option positions. I'm looking at a move below 1050, but 1040 is even better confirmation.