Turbulent Tuesday

Tuesday was a choppy day that ended pretty bearish as the last hour reversal made the SPX close under 700. After hours we even sold off hard to 681.50 but have since rebounded clear up to the high 690s. It doesn't seem like anything is going to lift this market but I still think this bleed lower can continue because we just haven't seen any real fear out there. I keep hearing some apathy and disbelief that the market is breaking levels not seen since the Clinton administration but no real panic. This might be because most investors have already bailed on their stocks in October. Or that we have become so accustomed to this bear market that a down day seems commonplace.

Whatever it is, we are really oversold so I would think we are within a week of seeing a nice snapback in the markets that could take us back to the 740s where I bet we fail and continue lower. Eventually I think the likely target on the downside is the low 600s. Which is sad but at this point probably inevitable. Overall in the grand scheme of things I think we are in the process of forming a large inverted head and shoulders pattern that could take all of 2009 to complete. Right now I think we are carving out the left side of the head. I will look at this closer in the coming weeks.

For Wednesday, the pivot point on the ES is 699.50. It should be even more of an important level to watch because it being so close to that mental 700 number. My bias is down but if we do somehow get above that 699-700 area and hold it then I think you gotta expect a surprise rally that could have legs. It seemed like the market wanted to start bouncing midday today but then retreated back down. It was a stabilization of some sort. Let's see if 700 wins or loses Wednesday.