Update: Also McClellan’s, ($NYMO) a popular oscillator, is oversold.

I have bullish leanings (wave-wise) based on a few items here and the charts Kenny has shown over the weekend.

1.) Daily SPX chart. 50/200 crossover. This technical aspect hasn’t happened in a bullish manner since Sep 2006. So I have to respect that potential. It should cross tomorrow. Also total down volume (as opposed to advance/decline ratio volume which was of course very down today) patterns are not yet indicative of a P3.

2.) $BPSPX. This has now corrected the farthest down since P2 started. Its more on the oversold side than not. Of course this does not tell you how prices will move, but if bearishness is back in vogue, and this is not yet P3, then logic tells me a bounce will happen that will allow the market to trace the final zigzag up to P2 peak sometime this summer. So based on thinking this is not yet P3 (we’ll know here this week!), shorts beware.

3.) VIX. I showed this on tonight’s update but didn’t talk about it. http://4.bp.blogspot.com/_TwUS3GyHKsQ/Sj_xGI_aSvI/AAAAAAAAA8I/ebx8tO2xDjI/s1600-h/vix.png

It seems to be triangulating again. And its not a bull triangle….its a continuation triangle and whenever it plays out, it will break lower. This break lower would most likely coincide with the breakout of a final ABC move to P2 peak.

4.) The e-minis hourly stochs and MACD is once again both on the floor together and when they are like that, at the very least, a dead cat bounce is in order.

5.) Daily tick, at -1101, the lowest since P2 started, is due for a bounce. And the market has support layers between 875 and here.

All in all, it points to the likely second Intermediate (X) wave of the P2 rally is tracing out in a (likely) triple zigzag (rare) to P2 peak. When will the (X) wave find its low? I am not sure, I listed some possibilities on my daily update.

Of course, if only a dead cat bounce occurs and then the market powers right down through 878 in a “third of a third” move, then there is a good chance all this is for naught and it is evidence of P3. But until that happens, I see no proof yet P3 is in motion.

I think the bottom line is be prepared for upside surprise. We really haven’t had upside surprise in a while.