Base Building Over - Slingshot Time

Since we put that low in on October 10 and the high in on October 14, the market has been trading in massive range.  The volatility is unbelievable, and the moves down were frightening.  Let's remove any bias here and state the facts.  This is what I see the market doing.

The Dow made a massive reversal on the lows of the 10th.  Since then the market has been trading within a 2000 point range.  The Dow has had huge volatility, up and down and has setup a triple bottom with higher lows and declining volume on each test.  There is also a triangle formation which many traders are watching; the bottom of that triangle was penetrated but upheld today.  Again, a good sign for the bulls.  Are we out of the woods yet?  Hell no, but the odds for a sustainable bottom have now drastically increased.  If I had to make a call here, I would say that the market will slingshot higher here.  What we are seeing here reminds of the bottom in the 2002 - 2003 bear market bottom where the market put three lows in with lighter volume each time.  Same type of setup but just on a much wider timeframe than the bottom we are talking about now. 

First things first before we get all giddy.  I want to see a close higher tomorrow and more importantly, I want to see a close above the key resistance zone labeled in the chart below, that is around the 9300 region.  The setup is there for the bulls to take control but until that level is closed above, nothing is proven.  If we bust that region, the symmetrical triangle will be busted to the upside and the market could run effortlessly. 

A close below 7866 would cause a waterfall decline in my opinion, that would break the back of every bull we would see capitulation probably down to the 6000 area.  PLEASE NOTE:  I BELIEVE THIS TO BE A VERY LOW PROBABILITY, SAY 3%.

As Al mentioned yesterday, October is a bear killer and I don't see it being any different this time around.  Let's see what tomorrow brings.