This market is chewing up traders and spitting them out. Today's surge caught a lot of people off guard. There was no real solid explanation for it...the most likely one is simply that too many people went short when the market broke 900 earlier this week on the SPX and they scrambled to cover when it went back above it. As I said before, you will get murdered if you chase breakouts/breakdowns. Buying dips, shorting rips is the way to go. The market is now overbought on a short term basis again and the fickleness of traders is evident as now the NASDAQ/NYSE volume ratio is back to 2 which is bearish again for the market. Keep in mind this is all short term stuff here. The VIX is now at 26 making a new low even though the market is at a lower high. This is a bearish divergence signaling complaceny.
I believe the market will pullback tommorow....in fact, bears have an opportunity to do some damage for the next couple of days. Be careful though because as I said, traders have been quite fickle....on a very short term basis they are going from exessive greed to fear and vice versa from one day to the next.
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