Option Investor
Update
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It's a battle between the trend lines this morning. SPX dropped down to the intersection of its broken downtrend line from November (for a bullish kiss?) and uptrend line from March 6th through the April 8th low, near 836. It has since bounced back up to its downtrend line from Monday's high through yesterday afternoon's high near 845 (which seems to be an important pivot level for SPX).

The bearish wave count, calling for a strong 3rd of a 3rd wave down today (for the move down from Monday), requires SPX to stay below yesterday afternoon's high (848.32) otherwise the pullback will look more like a correction and a resumption of the rally could be next. Therefore, long off the trend lines near 836 or short against yesterday afternoon's high near 848. Those are your two setups depending on which way you want to play the market.

I had recommended a short play on SMH yesterday afternoon and the stop on that play should be the same as SPX--right above yesterday afternoon's high at 20.27. It's currently trading at 19.54 with a morning high of 19.77 so far.

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