Today was another productive day, although I saw a little bit of weakness creaping through. The first half of the day it seemed the market couldn’t make up its’ mind as to which direction it wanted to go, then the last 2 hours it went up aggresively and hit the high of the day, and of course in the last 15 minutes it gave up most of the gains and closed nearly flat for the day.
Most of the indexes formed a classic star candlestick pattern on the daily chart, which generally speaking means indecision. The market is at a point where it can’t decide whether it wants to continue moving up OR go back down and possibly test the lows again.
It really isnt surprising that we get a pullback considering how far we have gone up. In the past 6 trading days we are up (IWM) over 8.5%, which is quite impressive.
My indicators became overbought today, which just reinforces the fact that we might need to see a little downside in order to let off some pressure before continuing upward. At this point I dont see a lot of negative pressure to have it be anything more than a rally pullback and not a retest of the previous lows, but traders are so skittish these days … who knows if the market will act rationally as we have a ‘regular’ pullback.
I remain cautiously bullish.