Markets had a bit of a quite strong rally without any kind of pullbacks at all. We have been expected a pullback but however we did not expect the rally to move up so strong…. this tells me 2 things.

1. For now I believe that the current rally is a REBOUND before we sell off further. The move down late January looks a bit too strong also to only be a 1 wave move down , so I would expect another sell off due. However IF SPX made new high above 1850, then we are going to rally a lot higher,, so keep watch mkts after HOLIDAYS.

2. We moved up on low volume past week INTO holidays,, usually mkts likely to move up into holidays and this is what happended. Should be interesting to see how mkts will do after President day.

3. VIX is now near “low levels” and I think VIX is bottoming out which means at least a PULLBACK on SPX OR another sharp sell off…..

4. NYSI about to give a buy signal – but however is near overbought territory.

5. Nikkei forming a top pattern and I believe that the Abenomics will fail as GDP numbers were again worse than expected. So we should see another sharp sell off on Nikkei which gives us better chances of a fall in US also.

Conclusion:

All in all – I EXPECT another sharp sell off on mkts after holidays – however IF SPX made new high above 1850 , then we are likely going to see a slow steady grind higher to 1900s in the coming months. So stay tuned its interesting times, but for now I would expect a new sell off which takes us below the previous lows of 1740.