Wow ! What a brilliant week ,, first of all we got the move down in markets , all the way down to SPY 133 where we started to go long right at the bottom , for an upside target of SPY 135-136 area on the bounce. However the bounce turned into a much bigger rally , a big short sqwiize which made all the shorts run and cover as we broke out to new highs and surprising enough , came all the way up to 1390 or SPY 139 !!

What is very interesting is that 139 or SPX 1390 has been a target we had for this entire rally for a long time, but we really did NOT get it over the past weeks , but suddendly now we are here and met this area.

Many people may think , now we go to new highs and rally further on , but if I’m reading this right , we should have topped out and markets next move down should be a big drop in a so called “wave 3” down.

Here is what I see:

1. VIX broke out big time early this week and went up 20-30% in 1 day ,, but then I called for VIX to drop because it wanted to make a bullish backtest of the breakout, so far we did this on Friday.

2. Markets broke down and should backtest broken trendlines , especially RUT did this ,,( look how weak RUSSELL vs overall markets) not a good sign either.

3. Markets went up about 2% on Friday , with VIX only down few % ? That is USUALLY a very bearish signal.

Conclusion: All in all – I think this rally is done or very close to done from June lows – my first upside targets have nearly be reached at SPX 1390 (SPY 139) but I wont rule out we still could see some more short sqwiize before hard down , they usually do it to the extremes and so on , but for now I’m heavy long UVXY at 7.55$ and holding tight ,, I think its a great price and with the next move down on SPX I’m looking for 20-30 area. And yes if they really do it to extremes they might push us up to 1400 and then down, but I would NOT chase this rally…..

All in all – dont chase this rally now ,, major trouble ahead now and this is the last rally before the next big sell off coming imo.