While I thought there may be a test of the recent low in the...

While I thought there may be a test of the recent low in the Dow, it's probably better for the bears (which includes me) that there wasn't as without the test the 12035 low is a weak low and should not offer much resistance when the downtrend resumes. As for when that is I'm favouring the 61.8% retracement level around 12840 or if not the 76.4% level around 13030.

Looking at the VIX, June looks to be a pullback month with a bit lower to go. That fits in nicely with the bear mkt rally in stocks. However, the monthly is heading up and once the June pullback is over then July and August should be big up months. So expect a lashing in the stock markets for those two months. There is also a lower double top in the VIX at 48 which should hold so that suggests the downside in stocks is limted (around 20% or so for mine).

As for the timing, I like the end of June for the rally high in stocks and pullback low in VIX. Interestingly, Merriman has a 3 star critical reversal date on June 28th and that looks to fit in perfectly with the charts.

As for the XJO, it can't rally to help itself and June looks to be a weak consolidation of last months big red candle. It should get down to the 2011 lows in the July/August timeframe.

And that's my two cents worth!

El Capo