I must confess to being a little baffled as to where we go from here today.  My gut tells me that we are both over-extended on the up side and due for the beginning of a serious pullback with the earnings season starting Monday.  Today's unemployment report was pretty ugly.    S&P futures have given up all of their overnight gains and currently sit at 830 (I have no idea what happened at 3:30 this morning to send the futures up - but it didn't make it past the unemployment report).

Here's a daily chart of the S&P - notice on the stochastics that we are in overbought territory:

S&P Daily Chart 6 Months

 

And here's my usual intra-day chart.  Notice in yesterday's action, that the close was very close to the first bar after the open.  Anyone who bought after 10 am yesterday ended up in a negative position for the day.  That tells me that even though yesterday was an upday, there was very little follow-through.  If it had been something to sustain the uptrend, prices should have kept rising, or at least not have given back what they had gained.  Notice that the 830 area acted as good support yesterday also.  If that can hold today once the market opens, that might be meaningful.

 S&P 500 15 Minute Chart - 4 Days

Via the 3-Day chart rule, we switched over to an uptrend yesterday as the price went past the previous 3-Day high while on a downtrend.  Can you tell that I'm discounting this?  I really don't think it will last or mean anything.   Since we are now technically in an uptrend, the area to watch for a trend switch is the 3 day low of 783 - and we're a good way away from this.

So, as for today's action I am highly ambivilent.   I don't think its going to go up from here, so I don't think it's worth switching to a long ETF.   Yet, there is nothing in my rules or in the actual market action yet that would justify a switch to the inverse.  So, at this point, I will stay out of the market until the market itself tells me what to do - and I think that might happen until Monday or even later.

Maybe I'll see more clarity a little later on.

Good luck!