A couple of days ago on my video, I talked about my hope that the market would "rally to the gap". Yesterday, it made baby steps, and today, it made its big move skyward.
Pretty much all the intraday graphs I follow look like the one below – – a low on Tuesday, and a lurch higher just underneath that tinted area, which for me represents important resistance.
I imagine the bulls are pretty pumped-up about today's GM-driven action; I would be too. Indeed, I was quite grateful to enter the day with a large EEM and FXE position. However, recent market action still remains a series of lower lows and lower highs:
As I mentioned early today, one of the nicest short set-ups was the real estate ETF symbol IYR; this performed pretty well for me today, in spite of the nearly 200 point rise in the Dow.
Now obviously if the dollar rolls over hard again (Bernanke will be making a speech in Europe, which will be in the wee hours of the morning here), maybe the bulls will simply run this market higher. I've been kind of stunned at how some former permabears are projecting new highs. Atilla has called for the /ES to move to as high as 1350, whereas even the fellows in Gainesville are calling for a push to new recovery highs before things roll over (they actually lay out three possibilities, which kind of makes it difficult to be wrong, but the new recovery highs seems to be their top choice).
So the record bullish sentiment seems to have affected everyone, including the most bearish of the bears on the web. For myself, I've lightened up on the bullish side – I'm at about a 15/85 split right now – and my portfolio is a tad light, at about 85%. Friday is dead quiet on the news front, so it'll be interesting to see if the market pads Thursday's gains or if we start rolling south again.
I don't really have anything else to say, so that's probably it for Slope for today. I'll see you in the morning!