Bounce Potential

We got part of the bounce I was looking for yesterday, but we also got new lows. The bounce took us to 1287 on he cash S&P. The low was 1277.

To repeat from yesterday:

There still has not been a material rise in the VIX. So I'm not looking for a lasting low. It seems that market participants have not had the living daylights scared out of them yet. That could well be around the corner still, but my read is that a near-term bounce will happen first.

This morning the S&P futures are showing strength, so the bounce can continue from here, or perhaps from another marginal low. Yesterday I was patiently waiting for 1275. I hope it happens today, but it's fine if it doesn't.

Jean-Claude Trichet, the head of the ECB, uttered the words "strong vigilance" in today's press conference, signaling a possible rate hike, and yet the Euro still went down. It got smacked. So it looks like the patient is addicted to the stimulus. This is something to be aware of worldwide. Markets, economies, and consumers are weak.

How high could we bounce? 1300 is a nice, round number and coincides with the smallest 23.6% Fibonacci retracement there is. If the S&P can't reach that spot, 1250 would immediately become the next target. Not today necessarily, but in the next few days at least.