Good morning. Happy Wednesday.
Over the weekend I said the onus was on the bulls once again to dig their heels in and defend their turf, and they rose to the challenge yesterday. The market gapped down and then rallied all day and closed near its high (odds favor taking out yesterday’s high today). Virtually no group was left behind, but volume was only so-so.
Here are the SPX weekly and daily charts. Two weeks ago I went neutral and for now I’m going to stay there. A lower high and higher low are in place. Pressure is building; the charts are setting up for an explosive move. The question is whether we have the catalyst to get it going and the participation to build momentum.
Remember the normal forces of supply and demand are not at work. The government is playing a much bigger role than is typical. What should happen won’t necessarily happen – at least in a timely manner. This is why trading the charts is more fruitful than reading news headlines. We trade what is happening, not what we want to happen or think should happen. To me trading is a big game of follow the leader, and I’m not the leader. When the big traders, the smart traders who have million-dollar research staffs buy and sell, they leave footprints in the charts. Our job is to find those footprints and follow them.
headlines at Yahoo Finance
stocks to watch from MarketWatch
today’s upgrades/downgrades
yesterday’s leaders & laggards
this week’s earnings & economic releases