There was a bit of a spike in the Volatility Index to go with an increase in volume today as the markets recoiled from their familiar complacency, urged in part by the deterioration of the debt ratings of Greece and Portugal. This sent markets reeling and gold flying.
The rally from the bottom has had a 61.8% retracement, which makes traders nervy. This is the point where the stock index must show its hand, and either keep moving higher and strike its bullish brand, or flounder in what may have been a protracted bounce from a deeply oversold bottom. It does not necessarily collapse from here, as a prolonged sideways consolidation is always an option. The Banks' trading algorithms love a sideways chop that skin both bulls and bears.
Watch the VIX and the volume.
Technical Indicators have not yet flashed a firm sell signal.
It will take at least another big down day with heavy volume to start the indicators rolling over.
When will the markets break for us, up or down,
S’io credesse che mia risposta fosse
A persona che mai tornasse al mondo,
Questa fiamma staria senza piu scosse.
Ma perciocche giammai di questo fondo
Non torno vivo alcun, s’i’odo il vero,
Senza tema d’infamia ti rispondo.
Or until human voices wake us, and we drown?
Ο ανήφορος φέρνει κατήφορο
Let us go then, you and I...
"Senators disturb us by reminding us of the possibility of large numbers swarming from China; but the answer to all this is obvious and very simple. If the Chinese come here, they will come for citizenship or merely for labor. If they come for citizenship, then in this desire do they give a pledge of loyalty to our institutions; and where is the peril in such vows? They are peaceful and industrious; how can their citizenship be the occasion of solicitude?"
Senator Charles Sumner, 1870