The S&P was in total short squeeze mode Tuesday. Looking at the charts above, Monday's closing left the S&P up against three major resistance lines. Later, the overnight S&P futures sold down through the night which of course is not acceptable for Team Yellen, so they opted to come in at 3 AM and run the SPDR S&P 500 (ARCA:SPY) up $2 from 3 AM to 6 AM which is the equivalent of 20 points on the S&P. They held the gap through the regular session open to cause the S&P to hop completely over all three resistance lines at the open triggering a blistering short squeeze the entire day.
Who wanted to deal with those pesky resistance lines anyway?
Looking at the second cluster of charts above, the short term channels of the Indexes, I have zoomed a little farther out so that we can see the blue channels we were trading in before the market broke down. The S&P and the NASDAQ got right up to the lower line of their blue channels at the close. The VIX & VXX both got down to the lower lines of their uphill blue channels. This leaves all four Indexes at trendline pivots for Wednesday morning.
Looking at the last chart above, the multiple channels of the S&P, we can see that the S&P closed right up against the lower line of the red channel which is the primary channel going back two years. Slipping out of this channel is what caused the market to sell off.
They are obviously trying to get the S&P back into that channel, the so-called Bernanke moon shot tube. The question is, can they patch that hole in the bubble?