Attached is a daily chart of S&P futures which I put a projection of market movement back in January. As you can see, the market has followed my red line very closely. It's quite possible the S&P has formed a significant bottom and will rally for months, if not years from current levels. However, I'm not jumping on big long just yet. The short term wave count would look better with one more new low (below 666 S&P cash), and the social environment just doesn't seem pessimistic enough to think a solid bottom can be in. I am not getting heavily short based on the long term picture, so I will play the short term side while always protecting my positions with options. The rally from the bottom looks impulsive, which suggests the trend has now changed from down to up, but we'll have to see how the decline unfolds as well. If the market rallies in an impulse wave and then declines in a choppy and messy decline with moderate internals, then that means it's time to buy. So we'll have to wait and see the structure of the decline to determine if the larger trend is up or down and that will tell me whether I should be looking for only long or short trades. But for now, the short term looks bearish.
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