Well, the Greek election came and went and, oddly enough, the world is still turning, the price of gas is still too high and (sadly) Mrs Eastwood & Co is still on the boob tube.  The election result was in the middle range of possible outcomes and, as such, has satisfied neither the bulls nor the bears.

Friday’s initial follow-through after the IH&S completion only slightly exceeded our June 1 forecast target, and this morning’s dip came very close to our downside target [see: Mixed Signals.]  These were adjusted this past Friday to 1342 on the upside and 1334 on the downside, as seen from this chart posted Friday morning:

So, did this morning’s dip to 1334.46 complete the IHS back test?  Mind you, I don’t object to immediate gratification; but, I think not.

continued…

Had the price decline taken place over a few days, I’d be fine with a 14-pt retracement.  But, it happened over a few minutes.  Not every back-test has to be a long, drawn out affair, but come on.  It’s not as though anything has been fixed over the past 48 hours.  Remember Spain?  The little pow-wow in Mexico?

I think it’s more likely we dip to 1326-1329 over the next several days before starting up — something more like this.

While the US Fed has perfected the art of heading the bears off at the pass, the euro powers-that-be seem to be most comfortable in reactive mode — meaning they’ll need at least a little shock to get them properly focused on more accommodative policy.

I’m very comfortable shorting here at 1348 (with appropriate stops, of course) and expect to be able to cover nearly 20 points lower.

Our VIX forecast from June 12 called for a dip from (then) 23.72 to 18.31.  VIX hit 18.57 this morning — again, pretty close.  There are no doubt a lot of disappointed bears being squeezed, with margin calls to force a little more weakness tomorrow morning.

I’ll post more on VIX this evening, as it’s been a terrific guide to equity prices.

Stay tuned.