the blogosphere and chartTweets are all seeing the same thing. The SPX is in a rising channel and the make-or-break is above 1398 or below 1375. If everyone sees the same thing, chances are its not happening and thinking like a crook we must be on the lookout for an alternative. We still maintain that the initial rally off the 1357 area was a 3 wave move so this “channel” is a corrective move retracing the first leg off the top. Therefore unless we are in a rising diagonal (only way 3 isn’t corrective) that is going for a new high we should still expect another leg lower. In correspondence with our thesis on a bond market short squeeze, we think the big trick is that we’ve already topped and we could start heading lower sooner rather than later, however you have to nimble and still be defensive. We think last week left most shorts in body bags along capitulation row therefore the pressure should be on the downside. If we are in the rising diagonal towards new highs it likely won’t get away from us too quickly.