Stick Save or White Flag?

Should be an interesting closing 70 minutes.  On one hand we have a disaster of a day with horrid breadth; usually the market does not reverse in the closing hour after such a performance (either upwards or downwards).  On the other hand S&P 1070 is a key level, and bears fear the 'invisible hand' that has often come to snap their necks the past year and a half. 

Bigger picture one can make a case either way as well - we were overbought and if there is more upside the market needed to consolidate and shake out the weak longs before a true assault on S&P 1100 happened.  (the S&P was rejected 3 times intraday this week at that level).   Or the far simpler case lies with the bears - the light volume, oversold dead cat bounce went to a key resistance level... and now is complete; that's all she's got captain.

While 1070 is a pivot point here, remember we've been in this trading range for months on end.  1040 to 1100 especially, with the 2 sub ranges of 1040 to 1070, and 1070 to 1100.  I am a broken record here.  Bigger picture I feel more comfortable placing shorts below 1040 because that has only been punctured once, whereas we've been flipping around in the 1040 to 1100 range for months.

Whatever the case, a high degree of cash and/or remaining hedged is the best course of action.  It remains impossible to build intermediate term positions and everything is simply a "trade". I do stand in amazement at the continued bipolar, Ritalin induced changes of mood.  The type of mood swings (greed, fear) that used to take months or even quarters to evolve, now are happening every 2 weeks.  Very strangely we seem to be in some sort of 9-10 day patterns of student body left lemming runs ...followed by student body right.  [The Bipolar Market in 1 Chart]