In subscriber updates we noted that the middle of the ‘W’ was at 1947.  That was the high that SPX would need to take out in order to keep the current bottom/bounce pattern on schedule for its best target of 2000 +/- (with the ‘+/-‘ the fudge that can get it up to the SMA 200, currently 2027 and slowly declining).

We noted on Wednesday in a very red pre-market that SPX had not yet projected to lose the EMA 20, which was the key in keeping the bounce scenario intact. I’ll bet that day whipsawed a lot of people. EMA 20 ultimately held (filling two of the gaps, leaving the lower for later) and now SPX has doinked a hair above 1947, closing at 1951. What’s more, it is above the SMA 50 and EMA 50. This morning’s pre-market is positive. So barring a reversal, the bounce scenario used the Wednesday drop to test critical short-term support, shake people out and get back on track.

Longer-term, Thing 2 is just what Thing 1 was; a relief valve to get freaked out players comfortable again. And I don’t think it will bounce as high or for as long as Thing 1. We’ll see. I really don’t care much because profits have been taken from the short side and a new short is slowly being created on this bounce, against long positions for balance in the short-term.