It's quite obvious the market is setting up for a break one way or the other

and despite all the warnings I mentioned I think it will be up. Why? Market action says so. I mentioned this before a few times. Take today for example. Notice how the market just simply gapped down and chopped around near the lows of the day and then recovered. This sort of action in the midst of a general market rise is indicative of wall of worry type behavior. For the most part, the market has behaved this way. The odd time when it didn't and signs of froth emerged, the market retreated shortly after nipping it at the bud.

I always pay attention to how the market moves thougout the day, not just the final result. Take for example 2 different days where the Dow closes up 150 points on each day. On one of the days the Dow gaped up 250 points and then fades throughout the day for 100 points. On the other day the Dow opened down 50 points and then reversed course climbing steadily but surely with a close near the highest point of the day. Those are two very different days but with the same end result. The former is an emotionally charged move that typically gets reversed in short time (which tend to occur in bear markets) and the latter is a healthy "climbing the wall of worry" type move that tend to occur in bull runs or extended bear rallies.

When I see market action like today, without any knowledge of sentiment, fundamentals, ect, I would classify it as healthy "wall of worry/profit taking behavior". But obviously context matters and for the reasons I pointed out before, although this action appears "healthy", medium term indicators are showing "unhealthy" signs. So, I'm more than open to the notion that the market yet again makes another push higher here (it seems like I've been saying this forever) but I have my guard up knowing that IT indicators are red-lined here and the end may be near for this rally. Next week provides an opportunity to use cheap options to speculate on an upside or downside breakout. Should be interesting.

What could give us full capitulation from both bears and under invested longs? How about a positive quarter of GDP? That might do it....perhaps that's what the market is sensing here....some sort of big headline bullish news that sends the message loud and clear that Armagedon is not comming. But then again, bears may just find some excuse to dismiss any type of positive news. I've seen perma-bear mentality manifest itself in the previous cycle....every positive data point was dismissed as "temporary" or "manipulation" and they fought the recovery all the way up for 5 years. That's ego for you folks.