Run for roses or Run for exits

Let's throw the emotions(one day rally), fundamentals (BOJ decision) and funnymentals (Wierd Wollie Whatever..) aside.

Let's look at basic TA. As i mentioned yesterday, the hourly Full Stoch was putting in a complex bottom, which suggested a sharp rally for a day or two. So today's action did not surprise me. The daily momentum is still on a solid sell. CCI(14) on the daily SPX went to -190. When the daily CCI reaches this low levels, it's hard for market to rally without putting in a divergent bottom. CCI(20) failed to turn up even with today's rally and is forming a shelf from which it can fall off rapidly. CCI(20) also has more room to run on the downside. The only way the market can rally in these kind techincal scenario is a straight run without pause which can create a V shaped bottom. Typically when a V shaped bottom happens, the rally out of the bottom tends to be very sharp and we see a 2%+ day. Had we got a 2% rally today and the CCI(14) had hooked above 100 and the CCI(20) had hooked above 0, that would have been a good indication that a reverse divergent setup was confirmed and a V shaped bottom is behind us. But today's action had none of those characteristics.

What is in the bulls favor though is a series of High TRIN days and High P/C ratio days. When the market is trending up and a couple of high TRIN days occur, it could be a sign of a ST bottom. When the market is already in a downtrending mode and we see the high TRIN days, it generally is a precursor to a capitulatory kind of selloff, which has not happened yet.

My own take is we run for the exits before we start the run for the roses. Will look for shorts tommorow, if we don't see a strong run up in the morning.