Coolhand's Market Analysis

In my last blog I mentioned that I was worried about the H&S being a bear trap in spite of the weakness that we were seeing at that time. As we saw it not only played out as a bear trap, but the strength of the move caught a lot of traders by surprise.

I had a SS buy signal last week, but the typical set-up for a buy signal was not there. We basically did a 180 in short order (no pun intended) and have quickly improved market internals, but not necessarily enough to be comfortable. Be that as it may there are other factors to consider.

I think it's a given that the economic landscape is still very fragile and the Politicians, Fed, and Treasury are continuing to paint an optimistic picture (for the most part). The Administration is ramming everything they can through the pipeline in spite of economic reality and doing so with as little debate as possible. I won't even mention what our VP said last week about the need to spend more money. Scary really. But from a crooks perspective, I think the last SS signal may have been a buy.

There’s just too many bears who cannot ignore economic reality and it’s causing them to short this market at every turn. And who can blame them. But the liquidity that’s been pumped into financials is probably being used to push this market higher. It’s just too easy for them with their resources and political assistance.

I’ll be looking for an entry point this week, unless this market falls hard soon with internals following suit. But if we retrace last week’s gains and support continues to hold on relatively weak volume, that will be my cue to go at least partially long.

Of course, there's also the possibility that we don't get much of a pullback. That's going to make my decision that much more difficult. But that was a big move last week, so if sentiment improves due to the rally we may do some consolidation before continuing higher.