This will be a short post

I don't have to write much because you saw all the intraday updates and know just about everything I do. As I suggested in one of my earliest posts this morning, I thought we may see some sort of reversal signal today at the close, I mentioned star, hammer or a doji. We closed today with a star on increasing volume.

As far as price/volume relationships go, increasing volume early in a downtrend indicates panic selling, but other then the gap down today, I didn't see much that looked panicked. So the other possibility for this price volume configuration is one we have talked about the last few days; churning. Churning at a top is when we see heavy volume and no price appreciation, it is indicative of distribution. When we see the same thing at a low like today, it implies the opposite, accumulation. Retail sellers are exiting, and institutional buyers are taking their shares, there's a sort of equilibrium between the two which makes sense if you are the institutional buyer trying to accumulate, you don't want to push prices up, at the same time you want to take as much of the sell-side retail out of the trade so they do not start selling into your party-"a bounce". We had a late day divergence right around the area I told you in an update to expect resistance, that was the $106.40 area, we got the turn around $106.30-this could have been institutions trying to pick up more shares or it could have been disappointed longs selling because the market failed to make any headway today. Or the remote possibility is institutional sellers, but the don't usually operate that way, on increasing volume-they sell into strength, not weakness, unless they themselves were panicked over something that hasn't hit the market yet.

Considering the amount of positive divergences through the major averages and the quality of them-some reaching 10 minute charts (which have turned markets for 3-4 days in my past experience), I'm going to say this was the best example of accumulation we've seen in probably weeks.

After hours trade is nearly flat, this is why I warned you if we didn't see a strong close we may see an early gap down, this is not in itself saying anything about a bounce, it only allows institutions to shake out the rest of the weak longs and take their shares on the cheap.

As I mentioned, considering a gap down and using risk management on a speculative position, you could enter a trade like UPRO and not risk more then 1-2% of your portfolio. You can also sit it out. I chose to hold onto short core positions through the ups and downs because of reasons I mentioned earlier.

So in my opinion, the most likely course of action for tomorrow's close is a close up, perhaps followed by another day or few days of bounce. Tonight I'll go through the charts and list what I see, but alerts are important. We had several trades trigger today, long and short that could have made you some money, so get those alerts put in place.

I'm here for your questions, sorry if I was slow today on any of them, I was watching a lot and posting a lot. If the posts are annoying to you, email me and I can take you off the mailing list. Most people love them, but I can see how 10 in a day might get annoying.

Look for trades later tonight.