There is a wide range of opinions out there right now concerning the direction of this market. Just from those who comment on this blog and follow my twitter feed, I’ve seen a lot of diverging opinions. For one, there has been some bearish divergences popping up on market indicators, particularly the McClellan Oscillator, which failed to make a new high when the market did on Friday – and we’re not talking a little bit either – it could be seen from outer-space practically. However, you have this 1130 price break that, in my opinion, trumps the those bearish divergences that we are seeing. Think about it….we’ve been in consolidation for the better part of five months (since the April highs) between 1130 and 1040. Last Monday, we broke out above 1130, and followed through on that breakout last Friday. Typically, once price breaks out of consolidation, in either direction, there is usually a major price move, which is what I believe we are in the midst of.
But I was honestly thinking that today might turn into a blood-bath for the bulls considering how horrid the Consumer Confidence report was (48 actual versus 52 expected), and after the huge sell-off early on, we actually rallied back and finished in the green for the day. That is a good sign that the bulls are still putting capital to work and buying the dips. Though I hate seeing, for the third straight day, price fail to break through the 1150 level. Furthermore, it shows that the market expects or has priced in some pretty bad numbers and with GDP and Jobs coming out Thursday, you have another potential catalyst for the market to rally higher.
