Markets bounced farther than I thought, reaching the 50-61.8% retracement from the 1497 low to the 1530 high. However, doesn't matter, as long as we are directionally putting on the right trades.
My best guess probability wise is it is still a B wave. In the EW principle, Robert Prechter describes a B wave as "phonies" or "sucker plays" or "rarely technically strong." Today seemed to "feel" that way. B waves do not retrace more than 75% so we have to see if it has enough firepower to get above 1520 area on Monday. Unfortunately I think this wave ran out of gas in the last 10 minutes. It did reach slightly better than 50% retracement so it's within the "B top zone." Hence, I feel more comfortable about shorting in this zone.
We bounced off a technically oversold level. While markets seemed to advance throughout the day, it was not strong. We started hot then flatlined for awhile until there was a final rip into the last 10 minutes of the trading day.
Next thing you know, Moody's issues a downgrade of UK rating from AAA to AA+. Looks like the sovereign "debt crisis" is back in the foreground. Could be the "catalyst" to get the C wave going.
C wave out to target roughly 1480-1485 on the SPX.