This session had "trickiness" written all over it even before the opening bell. Not only are we mulling through an opex week... which offers its own trickiness factor... but the dollar index sported a drop of over a full point coming off the CPI report. Turns out the tricky part of the day was the sole property of the dollar, as the buck rallied all the way back to close UP for the day. Filtering out all the noise, we see that the SPX performed exactly as suggested in yesterday's post:
Shortly after 3:00, the SPX finished erasing all of last Thursday's 11% scream, and we are now within 30 handles of erasing the entire 2002-07 bull market. I suspect the selling is almost over, but when I say "almost" I'm talking about time, not price. A breach of the 2002 lows is going to freak people out and induce the panic sell that ends this phase of the bear market. Whether the panic ends at 760 or 600 is unknowable (I'm typing fast so I can go to bed, so I don't know if that's a word), but the more important question is whether we are in a 1970s style market or a 1930s style market. This determination is important because it tells us whether we rally 50% and then slowly slide to deeper lows or rally 100% and then replay 2007-08. I'm still thinking about that one.