http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p83257770514&a=266398464

Monday showed some constructive activity (and true to our speculative nature we bought a little (very little) and lifted part of our hedge).  But as Yogi said, or it’s little known that he said, beware the bouncing cat.  As in the famous dead cat bounce.  Whether Monday and Tuesday represent that cat bouncing is unknowable at the moment.  Maybe Rumsfeld knows.  We don’t know, and we don’t know whether Rumsfeld knows.  At the very least it seems a 1987 waterfall appears not to be in the cards.

When you don’t know the thing is to be cautious.  The broken trendline at (1) is the ruling technical fact.  We don’t think full payment for this break has been collected, and we are monitoring the market on a full time basis.  Further explosions would cause us to put on a full hedge — and if severe, even to go net short.

We don’t anticipate such a scenario.  Making progress over the past few months has been like pulling hen’s teeth (chicken little’s) –but still the pattern has been of a bull trend — laboring but a true uptrend.  And –as yet — there is no top pattern showing.