Despite today's swoon, stock market rally isn't dead - yet

The expected cyclic low today blew some chilled air onto the stock market's rally - much needed, really, just a day after the market poked a new rally high with VIX at a new low! If you're looking for fundamental reasons, maybe it's earnings and maybe it's also that China's central bank unexpectedly raised its key lending rate and increased its bank reserve ratio. Anyway, our "string" worked again, with SPX 1137 tested right away, then up to 1142, and back to 1137. That gave way though, so it started looking like an "abc" zigzag, finally testing 1132 which I confess I hadn't really expected. After picking itself up again, the SPX straggled back toward 1137, closing just slightly over 1136. Whew, I have only a modified theory about the wave count (will describe later below). For now, we'll get more pessimistic if it breaks 1130/1132, but otherwise - it's feeling better, it isn't dead yet!

The TRIN was high today and even yesterday it hadn't brought its moving averages as low as we'd like to see for a swing trade sell. Especially so long as the SPX has neither reached target numbers, nor violated key support. Our target remains 1160+ and the SPX remains still over 1132, let alone 1122 and 1114. So our strategies remain in play. Which ones you're using depend on your style and timeframe. Some are raising cash at high points to be ready to buy defensive or short positions for swing trades down into February/March. Others are taking very short-term trades; still other are daytrading or doing a mix of these.

My guess of the EW count is changing and I note that today was trading day 7 of the new year. There was a 3-day rise and pullback, then another 3-day rise into yesterday and the pullback today. Four days up would get to Friday/Monday. Then another 2 or 3 would get to the 21st, which I note because Terry Laundry mentioned it in his updates recently. The rally could end on the 21st, or on Friday/Monday. Or theoretically tomorrow - but today's action renders that unlikely.

Still, the whiff of fear sent Treasuries including bonds and TLT up, which is actually "good" because it staves off the rate fears here. And at some point, probably later this year, we may hear arguments about money coming into US equities instead of going into other countries' indices. For us - we'll just keep trading the technicals. As long as our plan is working, which it is so far, we'll stick with it.