Conflicting Signals

Friday's scenario was looking for a small bounce that could fizzle any time. With futures down overnight, the bounce remains unimpressive.

There are two scenarios now that interest me, and they're counter intuitive. A continued bounce followed by a deeper probe to the 1900-1910 area might be bullish, and a shallower probe to 1920 or just below would be bearish.

Why? The deeper probe would suggest an A-B-C-style correction, while it's possible that the shallower probe to the 1920 could count as a completed first wave down, with two, three, four, and five to come, especially if followed by a stronger three-wave bounce.

Friday's TRIN closed at .54, solidly in the buy zone. And price stopped short of breaking 1922.93, the low of the breakout (the better level is 1918.60). Volume was weak again. So the market is throwing out some conflicting signals.

Today and tomorrow should be key in determining the next pattern, and the Fed meets this week, giving an interest rate decision at 2:00 pm EST on Wednesday.