First a Couple of Things I Don't Like

To be clear, with the call positions I have no problem at all with having closed them, they were at great gains and the probabilities of them seeing greater gains were starting to fall; they no longer (at least at that expiration) were the best tool for the situation.

Closing long positions, especially leveraged ones, does not automatically equate, "Go Short", there needs to be high probabilities built up there too. Yesterday we had NO probabilities of a reversal built up, today they started small and grew larger and larger, however are they screaming "High Probability Downside Reversal Now"? No, not yet, but moving in that direction.

Here are a few things I don't like before we move on to look at where we are in this market and where the opportunities are and when.

First we have the NFP tomorrow, Non-Farm Payrolls and this will be very interesting to see how the market reacts as you'd think a bad report would be bad for the market, but since the F_E_D has changed their yardstick for Policy Accommodation recently from a "DATE" driven guidance to "REAL TIME ECONOMIC FACTORS", a bad report may actually be taken well by the market as they see it as "F_E_D accommodation continues and isn't in trouble".

The other side of that coin is seasonal adjustments, we are in that period, during Q1 of 2012 they were heavy, they were everywhere and completely arbitrary. As soon as we moved out of that period the market fell as the Economic reports suddenly shifted from glowing to dirty.

How the market takes the news is what is important and this is the first major test of the year with a lot of under-currents attached to it.

I also don't like the daily candlesticks right now, they don't spell out high probability reversal and all of the averages are very close to another resistance zone. Remember this always, "Wall Street doesn't do ANYTHING without a reason" and as big and strong as this move has been, there are some areas not too far away that would hit an even stronger emotional chord and get the market to do what Wall Street wants (which I believe is to set up shorts at the best prices possible with as much supply as they can get).

Take the Dow which is in the best position as far as daily candles right now.

 First at "A" there's a resistance level that is very clear, there's no reason that can't be hit from here, remember I told you the move will be short compared to the other trens after this, but it will likely be stronger than any of us can imagine. The other thing is they can easily shakeout a bunch of traders by just dipping below the trendline and use their shares, accumulated in bulk to make that move above "A".

"B" is the daily candle set up, this is the best of the 4 averages and it's not there.

This is almost a Harami reversal to the downside, but not quite and even if it was, it would be a poor example. More importantly, at least as of where we stand now, the volume is not rising which i what we need to see to increase the chances of it working.

There are still charts in the S&P and NASDAQ Futures that have not gone negative or negative enough for me to feel like we are high probability right now.

Finally without getting in to every myopic detail, the dominant Price/Volume relationship last night among the components of all 4 major averages was Price Up/Volume Up which is the most bullish of the 4, the best Dominant relationship at this point for a downside reversal would be Price Up/Volume down.

So I'll be watching that tonight.

Remember, not every move is significant as part of the trend, many look like noise moves and are not significant in the trend, but do serve a tactical purpose, such as a quick move below support tomorrow followed by a move higher on Monday. Tomorrow's move would be noise in the trend, but would have served a tactical purpose.

Now, since underlying trade is moving so fast, I want to look at the other side of the coin and see how we are coming along. Remember, we are only 3 days in to this move, that's not a lot, even though the % gain has been strong. This is what we expected, we just have to rely on the market's underlying trade to tell us when it's over.