SPX Update: Bears Pull a Tennesse Titans (Super Bowl XXXIV)

Well, as of last update, bears had a chance to put the finishing blow on the market -- but they dropped the ball and bulls have run with it since.  Today's open is thus going to create two options:

1. A sizeable bull nest up from this month's low.  That option would see a strong, sustained rally to new all-time highs.
2. A very complex corrective wave.  For this option, bears will need to slow the current momentum and then reverse the market.  There are implications for a broadening trading range if they can manage this, and we'll address that in more detail if bears turn the market back down.  

This means that bears are in a potentially dangerous position, because of Option 1, and may be wise to await an impulsive decline before acting with force again.  Note that even if this is black bear (C) that it could run higher than shown.

One market that's been bothering me (for a few weeks) for the bear case is the Philadelphia Bank Index (BKX).  The current pattern appears to have "too many waves up" -- which is the expression I use when a pattern appears to need further upside (or downside for "too many waves down") to resolve.  Nothing's impossible, but it would at least be somewhat unusual for BKX to leave the high at 103.40 unresolved.  I've been ignoring this market in favor of SPX, but with SPX now breaking out without making a new low, this has to be viewed with caution by die-hard bears, at least unless/until there's a solid impulsive reversal in SPX.

In conclusion, bears were stopped short on the one yard line, and bulls are back in the game for now.  There are still multiple bear options, but be aware that there is at least significant bullish potential energy in the current breakout -- if bulls can sustain it.  If bears can whipsaw it fairly directly, then their best case scenarios will remain alive.  Trade safe.