Pullback for new highs or finally a top?

Well, we are nearing the range where the bulls have to make a decision. The largest pull back during our incredible rally was back in june/July for a total of 87 SPX points. Our current pullback comes in at a total of 68 with a low of 1033. You all remember the significance I had mentioned for our 38% retracement level at 1016 SPX - if we do see a sell off towards this level we will be adding a total of 17 points for a grand total of .... wait for it ... wait for it ... yes 85 points pull back - which happens to the same size pull back we have had back in June/July. This important 1016 support level is not only the important FIB but is also october low point. I had talked about the importance of this important 1016 price level back towards end of august after we had breached it for the first time. And we are getting very close to this level again.

Overall, I am having difficulties trying to identify where the market will head long term. During my trading experience I have always had a long term picture of market direction and used that to be able to trade short and mid term. At this point I want to refrain from guessing - to restate, we have quite a bullish setup with a breach of the 1016 SPX levels. Even if we break this range to the downside we have 880 as extremely strong support. Everything looks bullish long term while my fundamental views are quite bearish still. Since both views do not mix I have no choice but to remain light and stay out of major trades. Yes we may get our push down now that I had been expecting for many months - but in the end, I am struggling to see how the market can resolve to the downside I was expecting after such a strong run. Lets be honest, who would not be a buyer at the 880 levels - even the most committed bear would either enter a large hedge or even throw his long term bearish views out the window to enter a long.

I will post some more short term details after the overnight session - FX markets have done quite a turn around since the open so a lot can happen with SPX.