Wednesday Market Summary

Wednesday's trading was the same float up we saw on Tuesday and pretty much exactly what I've been calling for since last week. And after three days of trading to the upside, I now have a better idea of when to expect the pullback.

The SPX looks similar to almost every other chart I've been studying lately, both US and Canadian--a sharp down move followed by a sharp up move. This is a classic bear wedge. You'll notice from the chart below that we're heading straight into 4 areas of strong resistance--a trendline, the 50 moving average, the 61.8% Fib and a pivot low. Combine this with the bear flag and you have 5 factors saying to go short. This level corresponds roughly with 132 on the $SPY.

The only wildcard left is the timing. I'll short a hit of the 50MA, but before the holidays are over next week it won't surprise if we trade even higher temporarily. In light of this I may wait until we go slightly above this level to make sure I still get a good entry in that event. In any case, I still feel confident that this area has a high probability of being a short term top.

I'll post an update on the market later today and let you know what I'm thinking on twitter throughout the day.

Update: $SPX hit my targets and I'm now short a small position. The timing of this short could be better, but the levels are still good.