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

Daily Buy/Sell Strengthâ„¢

• Today we lost 1.31% in the S&P500 with a sell strength of 1.26. This compares to July 24th’s 2.31% decline with sell strength of 7.47 and July 28th’s 1.86% decline and sell strength of 4.4.
• The weak sell strength reading is bullish. It will take a STRONG reading to get me to change my mind on the rally.
• See how little the last red bar is? That was the amount of sell pressure today. Laughably small.

I highlighted areas where the iBC Daily Buy / Sell Strengthâ„¢ reading flip-flopped pretty quickly, so you can see that when it’s wrong, it gets you out before you get hurt. Check out Jan/Feb flip flop, which lost you 1% total on both trades. If the iBC Machine is wrong this time, I am confident I will exit with a small, manageable loss. The reading turned green on 7/17/2008 at 1246, and I am prepared whether we sell off or rally further.

Overbought / Oversold Oscillatorâ„¢:

• See the green line? It’s at the top of the channel–essentially overbought. However, the dotted orange line is still sloping down indicating selling has systematically slowed, and that more people are buying more stocks (dotted blue line rising).
• The green line will pullback soon, indicating flat to down for the next few days, but not necessarily ending the rally.

Today was a predictable down day, as we gave back some gains from the last two days. In yesterday’s update I highlighted that the buy ratio was only half as strong as the previous day’s, indicating clear buyer exhaustion.

“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.”

-Me, yesterday.

Guess what? We’ll might go lower from here–maybe another 2% down or 20 points on the S&P, to 1245. I would venture it was retail people piling in and out, off of Cramer, or even more probable, corn-can fuckers trading off of deposed geriatric legend, Uncle Greenspan.

Perhaps to the top of this trendline/20 day AM? That’s where I’ll be placing a lot of dynamite.

So far, I am fully buying this dip, and it is going to take a strong reversal to get me to change my mind. It’s clear that the fundamentals of the banks and economy are still shitty, but we trade in a crazy market, and it is still being bought.