dead cat bouncing, page-21

burnett

it's in the financial interest of market makers to drive the market where the majority of speculators don't make money. you'll normally notice a move 1-2 weeks prior to drive the market either up or down to that maximum pain point. this month, maximum pain for the spx is currently sitting at about 800.

so, last week's huge rally wasn't a big surprise - especially given the oversold conditions of the previous week.

however, if m.m. can't drive the market to where they want it (or close enough), we could see the market take a major hit. hedge funds will also be gearing up for their quarter end redemptions - which also has the potential to excerbate the decline.

after options, the market usually reverses whatever it has done leading up to options.

just my opinion from what i've seen during my short experience trading. i'm sure those more experienced will add their 2c. :)

http://www.softwarenorth.net/cot/current/charts/SP.png

this chart may be of interest - it shows that as at 10/3, 73% of small retailers were bullish, as opposed to 35% of large speculators....and commercials were sitting on the fence as 46%. if that doesn't tell you that we're closer to a short term top......
http://www.softwarenorth.net/cot/current/charts/SP.png