http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p22775897357&a=266398464

Yesterday the devils won, posting a 28 point range in the SPX, and rattling everyone’s teeth.  The significance for the larger pattern is the interruption of the zeta wave, which is now in danger.  Contrarians (the devils) have been sniping (devil’s snipers) at the market for months, leaving everybody — including Soros — or mainly Soros — to gnash their teeth.  This contest is not decided yet but the readiness of the market to go over Niagra Falls in a barrel over essentially trivial earnings data — (especially since basic economic conditions steadily improve) underlines how nervous the market is.  Very nervous.

Honestly, sometimes we feel like we are in a barnyard and the chickens are acting like they saw a fox.  But it is what it is and we must make new highs in the near future or the market will be in trouble.  We laid on more hedge in our personal accounts and pared back some of our UPRO position.

Objectively the market is now sideways.  A decisive breakout either way will determine the next few months of market direction.  We don’t like our gold trade, but we’ll stick with it awhile longer.

Objectively the market is sideways.  Whichever way it breaks out will determine market direction for the next few months.  If being caught in chop makes you uncomfortable you can do what we did, or you can buy straddles.  How do we feel about our rule of seven targets posted on the chart?  100% serene.  And there may be many typhoons between ports.  Right now we are in a squall.  Above all we must do what the chart directs us to do  — and right now defense is indicated.