Coolhand's Market Analysis

The market made a decisive move today and the direction was up as the major averages posted significant gains. More than half those gains came post-Fed announcement.



If you're following the Seven Sentinels, all signals are now in a buy condition, but due to the recent volatile action it may be prudent to wait until NYMO hits a 28 day trading high to confirm the buy signal. NYMO hit a 23 day trading high today, so it's not far off from triggering a buy signal should more upside action be in the cards.

Officially, the system remains in a sell condition, but it did give an "unconfirmed" buy signal today.

Don't forget the upside action this system captured so far this year. It's current sell signal was timely in a short time frame, but it's possible that it may or may not prove accurate in the longer term. So far the system has posted a 13.3% gain for year and that's nothing to sneeze at.

I stated a few blogs ago that I did not like the sentiment picture mid-week last week and I also believed that there is an active liquidity pump in progress. Not to mention it's tax season and end-of-quarter window dressing is almost here. All these elements are a bit much to overcome what has been a remarkable bull run to begin the new year. Not that it can't happen, and there has certainly been no shortage of bearish posts, charts, and media reports stating how delicate this bull market has become. But that bearish tone is feeding bearish sentiment, which tends to get very bearish when the bull begins to wobble. And that often leads to short covering rallies that just take the market that much higher. The question is, is this simply a final gasp higher? I tend to think not based on what I said a moment ago, but we'll see.

The balance of this week should be telling. I said in last night's blog that this is OPEX week so we could see some retracement (volatility) of recent gains before the week is out, but overall I doubt this market does much to the downside until after Friday. If then.