There was definite nervousness going into this morning with the hope that QE3 would be introduced by Ben. Bernanke at the summit. In fact, this most likely caused the drop in the market yesterday as with any market moving speech, most players exit beforehand and stay out during the uncertain times. So … yesterday’s down were people exiting to be cautious which caused today’s up since everyone got back into the market realizing that this really wasn’t a news event at all. I also think that having nothing new after his speech to report helped the market get bullish … change is evil, and no change is comforting … no change today calmed a lot of rattled nerves and helped people to focus.
Not much has changed in my analysis from days ago, every day I see more strength building as the market heals. We are in a definite trading range right now if you look at the charts and the market is ping ponging up and down between the numbers, but we are getting higher lows as the days progress which shows that we should break out to the long side.
my magic number seems to still be holding (IWM 68.25) as support which as you know, I mentioned was critical. It still keeps hitting it, but seems to be respecting it as support. As long as that continues, I see only one place for this market to go and that is up. Although I don’t expect it to happen quickly. There is no need to rush into this market … as i previously mentioned … when a man falls off a building … he doesn’t get right up and walk away, and neither does the market. We need time to heal the scars before people will become confident again to start speculating.
Still a concern is the low volume on the indexes which needs to change in order for things to start moving aggressively up, but it doesnt surprise me after such a strong downtrend that many players are still waiting on the side lines.
so, each day we see more signs of life, and as long as this pattern continues … there is no need to change course. I am now holding positions over night and moved from intraday trading back to regular buy and short term hold (until I see negative changes). I have buy orders in place for some upside targets, where if the market is able to break certain thresholds … I will purchase more. I assume we will see some of those targets hit in the later part of next week, and if it can hold those … then I will be much more comfortable in telling others to get their money back in the market.
We probably wont have much change until after labor in my opinion … next week, more up and down within the trading range, but after labor day I expect some nice bullishness to occur. Of course that is a week away, and in this market … A LOT can change between now and then.
Funny how this weekend, I am not going into it needing a beer as much as the past two weekends … I should start a ‘beer index’ … where when I need a beer … you sell and stay out of the market, and when I don’t … you buy and enjoy the ride up 🙂
Have a great weekend …