Hi Everyone,

Notes are in the charts. Today seemed like a well orchestrated short squeeze. I guess there were just too many bears that were banking on the same exact wave count, which was the move off the lows being a wave 2 up. There was/.is not a single impulsive move up from the lows and that definitely seemed like the correct count and it has paid off trading the wave 2 up count.

Everything seemed like it was going as planned for the bears, but when the algos triggered the buy program that blasted all of the indexes through the 78% resistance pivot, where typically wave 2 reverse and has proven the reversal area for the last few rally attempts, shorts started scrambling. Once the last of the shorts were out, the spx futures (es) dropped almost 20 points into the close and after hours.

The wave count is anything but easy to figure out and now the algos can take the indexes whichever way they want and have it fit some type of wave count. I mentioned in the afternoon notes that there was a chance we could still be making a wave 2, but it would be a wave 2 flat. That count could still be in play, but we would have to give it not as much weight as far as playing out right now. If that is the wave count in play, it would catch both the bulls and bears by surprise.

There are some things that I am still trying to figure out here and that has to do with how this market will react if next Wednesday comes and goes and Ben does not launch qe3/twist. The way I am looking at this, if the spx is anywhere near 1200 and oil is anywhere near 90, the fed will not launch qe3/twist. Why would they throw out their wild card if they were trading at those levels. I believe they would have much more to lose than gain if oil was near 90 and they launched any type of qe.

I am reading and hearing all over the place that the market is going to go on a tear because the europe crisis may be on the back burner for now. Let's assume that is indeed the case, does that change our current economic conditions? Should the spx be trading in the 1200-1300's if our economy is not supporting those levels? In the past, the economy didn't matter because the street had qe to run with and it was a risk on environment. But with the spx/oil at these levels, qe looks less and less likely come next Wednesday and that leaves money managers with a decision-should I buy the markets at these levels as our economy is shrinking without the back stop of qe? Just something to think about. G-