Just about as stetched as it gets in the ST

As a result of today's move the market is now just as overbought as it gets on a ST basis so I'm expecting to see the market cool off here either by going sideways for a couple of days or pulling back.

I made a post a few weeks ago saying that conditions were beginning to remind me of March 2002 which led to a multi-month decline and new bear market lows. However, I did say that not all conditions were in place yet to make the comparison complete and conditions never did fall in place and to this day have not. What I expected to see when that H&S failed was full fledged capitulation from wrong way bears and a big spike in bullish sentiment as underinvested longs completely dropped their guards. Instead what we have seen is the same wrong way bears hold steady with their shorts or added back shorts quickly after getting stopped out while others simply got blown out of the water by force because they were already "all in". Although more sidelined money is coming in, you are also seeing longs quick to take money off the table and some have even turned to the bear side. I'm sorry, but that is not what you see at major tops. Everything I just described is the psychology you see in a bull market. The media is starting to talk more about a housing bottom and recovery but the average Joe Sixpack still isn't close to embracing that the worst is over. I still see commercials on TV that begin with "in these tough economic times". Main street media has been and always will be late to the party in recognizing a financial trend...by the time they recognize it, it's just about over or already is.

Unless I see a significant change in attitudes and expectations, I believe SPX 1100 at the very least will be seen before year's end. It's going to be tricky though from this point forward because the market is so overbought. In a strong market overbought can become even more overbought but we are at the point right now where historically on a ST basis the market has rarely advanced further without at least a bit of a breather. I see only a maximum of a 1.5% advance from here if the market just keeps going up from here without any retracement at all.