What Would Turn Me Bullish Again

E-mini Futures Sunday Night June 16 2013

As I've been posting, I believe that we have seen more weakness than strength recently. Obviously, the averages have pulled back, but it is more than that - it is the increased volatility, the tepid bounces, the failure to hold key support levels aside from the all-important 1600.

Futures are up about 6 points right now, along with the Nikkei 225, so the temptation is to say that all that unpleasant selling is behind us. Perhaps, but I doubt it.

That said, I'm perfectly happy to change my assessment to Bullish at any time, because the market spends most of its time going up, not down. It simply is more profitable over time to be long the averages than short them. I fully expect the market to weaken as Bernanke's performance approaches, then have some kind of wicked move thereafter.

In the chart above, I have drawn a simple trendlne from the all-time high at 1685 downward. Note that we have hit it several times, but not breached it, at least for very long. A decisive move above that would turn me Bullish. We haven't it yet. It wouldn't take much, as it currently sits around 1633 - but the proof is in the pudding.

After that, we need continuation above 1640, with a close above that level. That is unlikely with all the Fed action due this week, but the market can do crazy things.

To the downside, yes, there is a bottom channel line, but all that really matters right now is the 1600-ish level.