Pullback Still Likely But Rally Continues

There's not much to add tonight technically speaking.  The market continues to chop its way higher.  There are some cycle lows due in late September and early October.  It seems that all that will happen is a pullback into those cycle lows.  The SP500 has successfully closed above the median line for the decline for the second time in two weeks, which means the probability of rising to the upper channel line around 1260 is now significantly higher.

Unless you were short NFLX or RIMM, short has not been a fun place to be for the most part since August 22.  I suspect it will remain that way into the end of the year and possibly January.  The bears continue to hope for the mythical 5th wave down that will validate the beginning of primary wave 3 down.  However, when the SP500 challenges the June 16 low that hope will be thrown out the window.

The best scenario for traders right now is long with conservative targets until we see more stocks set up with sound bases and better breadth numbers.  This may come in late September and early October, but there's no reason to rush it.  There are a lot of triangles and flags right now for long entries, but a dearth of larger bases.

Be prepared for several more months of this type of market action before the uptrend resumes.