The bearish scenario to 885 panned out and now we got a bounce. So now what? I did say that if the market hit 885 the rally would be done and I did say that I believed a 1-2 month consolidation phase would occur but guess what? I many not be bullish enough. Ya you heard me....here's why. I looked at the 1974, 1982, 1990 and 2003 bottoms. All of them produced a sharp rally for 2 months. Then, they took a little dip for about 5-6% at about that 2 month mark before ripping higher for another month or 2 to really send a message....then we got the 1-3 month sideways action.
Therefore, I believe 1 of 2 things is going on here....
1) We are building an IT top before rolling over into another down leg to retest the lows or
2) We are going to start to make another leg higher to 1000-1100 in the not too distant future after perhaps a move to 875-880 (maybe it has already started...who knows).
Seems ludicrous to expect scenario 2 panning out doesn't it?...The more logical choice would be 1...and this is why 2 could actually happen. The market does it's best to humiliate and surprise the majority which why I think 2 has a good chance of panning out.
I am probably the only person on the entire planet making the extreme bullish case like the one I described.... but it fits with all the anecdotal stuff I've been talking about for weeks i.e. the chronic skepticism/bearishness that I see out there amongst the herd. But don't get me wrong though....I ain't no permabull. I'm just fleshing out the unthinkable which the market tends to gravitate to. If evidence suggests other scenarios will pan out, then I will adjust accordingly.
Taking things one day a time...in fact, I think we could see 880-875 in the next 1-2 days and I might bet on this. If we hit that level, my outlandish thesis will be put to the test.
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