Both Eyes Required

Another inconclusive day yesterday with virtually non-existent volume. The S&P had the chance to move lower, and it didn't.  It had the chance to move higher, and it didn't.

Last night it had the chance to move lower, it did, but then it rallied back to the middle of the range. At some point, the market will move, and could move a lot. For now it feels like higher and lower numbers to come, meaning I don't think it's finished going down, but it could rally higher than expected.

Although much lower levels were shown here yesterday as possible targets, I'm also on the lookout for a marginal low whereby the S&P gets below 1373.03 but not by much. Then a larger rally could occur into 1400 or above.

The alternate expectation is that it breaks hard after not being able to rally. Possibly much harder than anyone expects.  Hedgeye noted that for the two weeks ended 10/15 short interest for NYSE, NASDAQ and AMEX combined ticked down to 3.65% of the float from 3.67% prior. That’s the lowest ratio since the two weeks ended 5/15. In other words, far fewer shorts mean far fewer buyers should the market tumble.

Also, an overlay by Chris Carolan is making the rounds of the 1987 crash analog vs. the current juncture in the S&P.  A 28% plunge, as occurred then would see 995 on the S&P.

There also seems to be a high level of brinkmanship coming into the negotiations between the White House and Speaker Boehner. Bonds seem to be sniffing this out, with the 30-year looking like it wants to head to much higher highs.

Meanwhile over 20 States have petitioned for secession. A lot of news is swirling. A good time to keep both eyes on the ball.