The triangle broke, the triangle broke was the cry as I entered the Famous Foley Coffee Shop for lunch today.  As I made my way to my usual seat at the big round table near the front, I nodded my approval with a "Yes, perhaps it has".  

Almost immediately I became suspicious of the breakdown. If the cook in the famous Foley Coffee Shop new about the running triangle, so must everyone else!  And if EVERYONE believes something in the market.....uh.....isn't that a problem? I think it could be!

Ok, Ok, nobody actually yelled that out...but they would have if they'd been reading my blog! The only thing they wanted to know was if I was finally going to try the breaded pork cutlet special.

There were actually other reasons I was suspicious of this breakdown today. I'm not going to get into them here (they're top secret) but suffice it say that I found myself getting very bullish as the S&P neared 800. This reversal today could be the start of something bigger. It also could be one of the most cruel moves the market has made in some time...a false break followed by a false false break, which gives you a real break! Get it? 

If the market breaks back down tomorrow or the next day, that's what we'll have. I have data in hand that suggests both directional moves appear to be high probability events! How could that be? It's simply the state of confusion the markets are in right now. That's why you HAVE to trade mechanically here using stops and not your emotions to make trading decisions. How many of you were taken by surprise with the last hour rebound today and looked for somebody to blame (PPT, etc.)? See what I mean? It was an emotional move for a lot of people.

So tomorrow is a test. It's a test of the apparent false break. 805 or so is critical on the downside. A break below 820 and then 805 would solidify the breakdown from the triangle as real. A break above 850 will be constructive to the upside. I can hardly wait to find out what's for lunch tomorrow.