Today's topic is a follow up to my post on May 10. I have marked SELL on the chart at the spot, where on May 10th I warned of a bearish setup for stocks.

Please go to the achives to see the original post. Now that we have tumbled sharply, what is next. We are very short term oversold at this point. As a result, a rally could happen at any time.

However, the pattern I mentioned was a larger picture pattern, which historically has preceeded very large drops in the market. Be very careful committing anything to the long side of the market here. It is likely that this selloff will continue for a bit, setting up a buy point in the fall.

The commercials, have gotten more heavily short during this drop. This is not a good sign for a rebound from this.