To all who doubt The Machineâ„¢:

The Machineâ„¢ Flashback 6/10/2008, S&P at 1360:

“Bullish or bearish, and things certainly seem bearish, the The Machineâ„¢ will put one question to rest with certainty for you all.

If indeed we are fucked, we are nowhere near bottomed already.”

That was a money call, as the index shed 10% from that point over the next month. If you are a new reader and you are just being introduced to The Machineâ„¢, it rules.

The iBCMâ„¢ turned net BULLISH yesterday, with two out of my three indicators turning positive. My Overbought / Oversold Oscillatorâ„¢ is in neutral territory. Please click the pictures below for more detail, and study it over a nice scotch. You earned it.

Daily Buy / Sell Indicatorâ„¢ vs. S&P 500, color coded green when the indicator is bullish, red when bearish. As you can see it is green and bullish.

Overbought / Oversold Oscillator. Green line is near overbought, but trendline remains much lower than the peak of historical bear market rallies.

Make no mistake about it, this is a bear market rally, but pack your party loafers and sultan hat because we’re headed higher. My tells will be the vigor of selling over the next few days as we pullback (primarily) and the ability of the index to hold the 20 day MAs.

It’s logical to expect some giveback after the run we just had, and the iBC Machine’s Daily Strengthâ„¢ was half that of yesterday’s, indicating some buyer exhaustion. I would buy this dip, especially in the grenades of doom.

Here’s what’s interesting–consider the [[skf]]. It’s YTD low is 92. Right now, the price is 119. In order for SKF to trade back to 92, the money dumping bags of crap would have to be back at their relative highs for the year. Since the fundamentals don’t warrant that, I think SKF is approaching a low risk:high reward buy point. That contradicts the premise of a market rally, which is contingent on Financials holding up and oil staying in the 120s. I would listen to these guidos (Fly, Alpha) on there rationale for buying shit.

This is additional evidence to me that the rally may be short in duration, perhaps a few weeks, as I commented yesterday, because there is no way to know how long that situation will remain. I would venture that from the lows, 50% of the gains are behind us.

We may already be there. Remember, I usually like at least three days of net bullish behavior before conceding a trend change. We’re on day two, I just started buying early because of the numerous similarities this rally shares with the last few countertrend rallies. A sharp reversal on a big iBCM Daily reading would change that.

Currently, I think we can hit 1315 in the S&P.