The market broke out of the triangle I mentioned yesterday to test the all time high but it finally put in a long overdue top today and now the question is whether the 50 day moving average/trend avg will be tested as I have been expecting. A successful test of the 1815 area would set the market up for a proper looking Inverse Head and Shoulders that targets 1963 so we'll see how the market handles that key level. I see an ABC move from the 1847 high so far but if that turns into a 5 wave count then it targets the 1815 area or today's trend average. Also, there is a micro Head and Shoulders that targets 1824 so the chart patterns favor mode downside. One thing however to keep in mind is that the correction to 1737 was not long enough in time to call it an Int LT W4 so I am keeping in mind the possibility of a Flat being put in that will essentially test 1737 again before rallying. The key to all of this is the 50 DMA, it has to hold for the market to continue to go up. Lastly, the China PMI was just announced at 48.3 which will be plastered over the news. The correction last month started when the China PMI came in at 49.5, so if the market's intention was to sell off then this can be used as an excuse. Never mind that China has been rallying and actually continues to rally after tonight's "bad" news, this is not about China but about finding a reason for make bag holders out of blindly optimistic bulls.
I had a choice to sell VXX for a profit at the close but decided to hedge my short position instead by buying back GXC (China ETF). So we'll see if the market sells off in a W3 or starts to bounce tomorrow.
Short Term Trend = Bullish
Medium Term Trend = Bullish
Long Term Trend = Bullish
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