If the commodities market means anything to this stock rally, today's sell off should be indicating something similar in store for stocks. Today's market found support at the gap from Jan 3rd but the pattern favors an ABC move or a 5 wave move. If this is an ABC move that finds support at 1250 then it could possibly shoot up to a new high in a W5 move. But if we get a very sharp sell off that breaks thru the 1250 support area then we can comfortably call a intermediate top. The market could also find support at 1250 then bounce to the 1255-1260 area and form a right shoulder on the H&S formation I mentioned yesterday before a convincing sell off. I am holding my short positions in the meantime and watching how the market behaves in the next couple of sessions. I am looking for closes below the 1261 level to confirm a bearish turn.
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