The market is now in the area I mentioned in the last update (around the morning highs) in which I think a pullback from there is probable. I think it will turn out to be more then just a slight correction, but likely a head fake pullback, shorts are itching to jump back in their trade.
This is a chart I've been collaborating on with a member and has worked well for trends/reversals, it's based on volatility.
During the downtrend, prices stayed under the red volatility line the entire time, long term stochastics which are being used to confirm the strength of the downtrend, not as an indication of oversold, have stayed where they were expected to. At the far right you can see the first hints of a change with the volatility line being broken and my blue Trend Channel flattening out as well as Stochastics moving above 20.
Here's the more recent trend, very bullish. Both the volatility line and the Trend Channel are at the same exact spot and I would expect this level in the IWM to hold, but we may see a dip to the area.
Right now the market is starting to look transitional, it's about where I would expect this behavior and the start of a pullback. However as I mentioned, there are still great longs, I would just not fill your plate quite yet and leave some room to add with some wider stops initially.
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