Hi Everyone,

Well, today's close wasn't bull friendly and it leaves many unanswered question. Did we finish the wave C up and are now about to embark on a wave 5 down? Or did we just finish wave A at today's high and the late day drop is/was a wave B down and we are going to see a wave C to new highs.

I can build a pretty good case for either side, but I believe it is all going to come down to what Ben has to say tomorrow. I am still on the side that with oil near 90 and the spx near 1200, Ben will do absolutely nothing tomorrow or announce some type of twist program. If that is the case, there is a chance we could see a sharp sell off shortly after the announcement.

If he announces the twist program, we may see a spike higher as the algos may be programed to just bu any type of fed announcement that could sound like qe2. But the twist program, which is simply shuffling the chairs on the titanic and will do absolutely nothing for the economy and I believe the street will end up being disappointed once the dust settles.

The dollar is not really worried about a massive qe program coming from the Fed or else we would have seen it selling off much more than we have. Something else to take note of heading into the announcement, is the difference in the psychology of traders heading into this announcement.

Everyone want to get into the markets ahead of the qe3 announcement (qe3 ghost chasers) and bulls are buying the dips. Bears don't want to get cought short if Ben does announce some type of qe3 and are covering ahead of the announcement. We have the potential of a totally inverted qe2 trade set up.

Let me explain; qe2 came as a total surprise to almost everyone. In July 2010, shorts were shorting and bulls were selling. When Ben came out and announced qe2, shorts had to cover and the bulls that were selling had to start buying again and we got a monster run up in the equity markets. Now we have shorts covering and bulls buying ahead of something that I believe has very low odds of even happening. (spx 1200-oil near 90-why would Ben throw out his wild card now)

If Ben does nothing tomorrow, the bulls that were ghost chasing qe3 will have to unwind their positions and the bears that have been covering will have to start shorting again. There will be no buyers underneath this market just like there was no sellers when qe2 was announced in 2010. I am not 100% sure this will happen, but 1 thing is for sure, the inverse trade set up is in place. G-