Quicksand

BOTTOM LINE: Equities are in rally mode, which was expected. The bounce so far is strong in price, but weak in volume. This suggests that a fifth wave rally is unfolding, rather than a correction higher. 1021 on SP500 futures and 5460 on DAX futures are bear-trigger levels (should the market tank from here).

On the daily chart below, the DAX is moving higher off the support provided by the rising channel. I would love the market to challenge September highs, which would provide excellent levels for shorting.

This is a four-hourly chart of the Dow Transports. I believe that an impulsive structure down has been built, and will now take a few days to correct higher to ease oversold momentum.

One of the bell-weather stocks for the broader market, this is a daily chart of Baidu, a Chinese internet search engine. You might notice that its chart is almost identical to Apple and a number of other tech names. It appears that the decline of 2008 was a large C wave, and the rally since then has been an incredibly orderly impulse. This impulse is now in its very final stages.

Elsewhere, the USD continues to build a base against a number of currencies.