JasonGordon's  Instablog

The markets gapped up pretty big today on positive statements from the G-20 meeting. The world governments made a pledge to aid economies, whatever that means. I guess they are promising to print more money... fantastic.

Anyway, all the major indexes (SPY, DIA, QQQQ, and IWM) are up about 1.5% today and the Financials (XLF) are up 2.5%. The markets gapped up across the board and made practically no attempt to fill the gaps, which is bullish. The TICK is obviously bullish. The TRIN is a little overly-bullish under 0.4. The VIX is down almost 3% which is a little bit of a red flag. The VIX should be down much more on such a bullish day (in terms of price action at least), but the fact that the VIX is not down more says to me that options traders do not believe in this up move completely.

Unless we somehow close in negative territory on SPY today, the Head and Shoulders formation I was looking for will not be a possibility any more. SPY gapped above 108 which should now act as support and is finding some resistance here at 109. On a break above 109, expect a run to 110 which should prove to be major resistance. The SPY could turn around at 110 and make the beginnings of a Double Top formation. That would be incredibly bearish. The IWM double top will remain confirmed, though weakened, if the index makes a lower swing high here. The IWM could even make a Triple Top formation in the near future.

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