Today's action took the form of what I call a "bull run." A bull run day consists of a gap higher on the open followed by a steady rally throughout the day that goes out near the high. Take a look at the S&P 500 5-minute chart:
Bull run days are typically not rally-ending, but rather the opposite. They occur out of basing patterns, usually take out a significant resistance level, and signal the start of another impulse higher. Today's gain cracked higher out of a recent consolidation triangle and also produced a close above the important 65DMA. The fact that volume picked up on today's breakout is just a kicker.
Recent posts have described the potential for one more rally before equities roll over again, and I think that rally is now underway. It seems likely we will now complete the "C" wave of the counter-trend move off the July low as postulated in an Elliott Wave chart several days ago. C waves will typically extend to the top of the A wave at a very minimum (weak market) and can run as far from its bottom as did the A wave. Therefore, this rally can be expected to take the SPX to anywhere from 1314 to 1374. This is a broad range, so we'll just have to keep our eyes open for typical signs of a turning point such as a failed rally (especially on good news) or a heavy selling-into-strength day on Lowry's indicator.
I continue to believe that the next impulsive move downward will be a doosie. It just seems like the whole world knows it, so we have to shake of more shorts before the fun can get underway.