Yesterday, I wrote about the five waves down I’m seeing on the S&P 500 daily chart for the last year.  Here’s a chart I made which shows the five waves a little clearer.  You can see at pivot points number two and three, that it took basically a week to get back into that channel.  I was expecting a similar scenario for this last pivot low, but the market seems to be moving much faster than usual.  Now that the SPX is back in the channel, it’s either going to retest the bottom trendline, or just rip higher.  I suppose it could just base out here, but I’d be real surprised if it did that.  My thought is that it’s going back to the upper trendline in the next 20 days.  So I’ve decided to give it the 20 day test, and hold some UWM, UYG and QLD, which I bought today.  My target is that top trendline near 1275.  My stop is currently below the bottom trendline, and I’ll have to wait to see here if there’s another pivot low which forms at a higher low.

If you would have told me a few years ago, that I’d be trading QID based on votes I was watching during a voting session on CSPAN, I would have laughed… but that’s how I traded today.  Interesting times.

In the end, the SPX and Nasdaq closed below long term trendline support.  This stretches back to October of 2007.  Ugly for the bulls obviously.  This channel trendline has been overshot before in Jan ‘08, and March ‘08.  Both times the SPX was back in the channel within a week.  This will be the 5th wave down on that channel, with each wave lasting 5-7 weeks. With the VIX whacking an all-time high of 48.40, we’re  due for a bounce soon.  If they reform this bill or pull something else out of the magic hat, this could be a significant bottom.  Still a hit and run market though.  Wait for those higher high candles to buy.