OK. There now appears little doubt that the equity market reversal we pointed toward last week -- while a bit sloppy on an intraday basis -- basically occured on the right day near the right levels. Our specific trade advice on AOL and GTW may have gone somewhat awry, but we are still bullish this market in the short term. The charts of Sun Microsystems (SUNW) and Erickson (ERICY) deserve some attention for potential short-term rallies from very oversold levels.

And yet, 945-975 on the S&P 500 will represent a band of substantive "neckline" resistance, and we're almost there!

Range trading betwen 845 and 975 on the S&P 500 would thus seem the expected path here. Is it time to sell a few option strangles perhaps, and take advantage of the still high VIX? Perhaps.

Meanwhile for those who insist on selling something, the charts we continue to view with much attraction on the short side include the Head and Shoulders patterns in Heating Oil and Crude Oil, as well as the chart of Copper. Note that these are weekly charts, and the mucking about in the oil complex under the neckline has continued for sometime now. We thus cannot pinpoint when the pattern will resolve itself, but we do think the probabilities are that it will resolve itself to the downside. Copper has already started to show recent signs of breaking lower, and may be indicative of home building trends within the U.S. finally starting to weaken.

Chart constructed using Advanced GET End-of-Day

Chart constructed using Advanced GET End-of-Day

Chart constructed using Advanced GET End-of-Day

Could it be that we are about to get a strong whiff of deflation that the broad equity market interprets in the short-term as being bullish? At the end of the day, collapsing commodity prices would not of course be bullish equities, but such might temporarily give the Fed watchers more cause to espouse rate cuts, and other bullish equity pabulum.

Given all the different chart patterns at hand across different areas, it may well be that we turn more of our attention to the oil and base metal markets in the coming days and weeks. It is in these sectors that we currently smell impulsive moves -- likely down -- brewing.

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