The earlier spike low at 123.87 has now reversed and recovered into the 125.10/20 area, but needs to continue to challenge the 125.50/60 intraday resistance plateau to start to inflict some damage to the shorts. And then there is the 126.20 level, which if hurdled, should trigger a powerful upside extension of what my work argues will be a wickedly strong and fast upmove that could end up challenging the recent highs at 129.56. Yes, we are that oversold here. In any case, we do not want to see the SPY's below 123.87 anytime soon. We remain 100% long the SPY's at an average price of 125.08.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.