"V" for victory?

From Monday till Thursday, we literally went in a V shape.    Today's close of SPX 1007 is only a few points away from the recent high and erases the Monday gap down.    At this point,  you simply have to give it to the Bulls!.  Wow!   We were hoping that the selloff that started on Monday would create some good opportunity for new money to enter.    Well,  the opportunity came at around 3:55 p.m. on Monday and went away the next couple of days.   Earlier that Monday in a post and that night,  we pointed out the underlying positives that were ignored.  The credit card Mastertrust number have paved for the Financials to lead this reversal, (including today +2.6%) and the Empire number was a prelude to a great Philly fed # today.   In a Journal following Mondays rip down, we said it was useless to sell into a gap of that size + (at support 982) and because there were ’3 actual positives”,  so we just ‘hold the longer bull side‘.   If you held tight and added, even averaged down, good for you.  

What has clearly occurred (as seen in WSJ SPY puts note we put up), the entire market was waiting for a meaningful pullback and created a squeeze.   Now...What we have is a possible twist on the game if we breakout, one where the expectation of a broad pullback derails anytime soon and therefore more money comes into the market as patience is rotted away from being underinvested.  Underperforming may no longer be an option heading forward to Q4.  Hey,  those that did lose their jobs in this credit crisis, might just get their jobs back if these money managers don’t perform.  Lots of pressure out there on the street.

Yes,  even we feel somewhat disappointed that the pullback didn‘t go any lower.  If you start one, you might as well do a real good one.   That way, we know that it may be the last for awhile.   On the other hand, we are also glad that market is able to push back and end what might potentially be the shortest pullback in recent history.    We’re still a bit worried that the recent high of SPX 1015 is too much of a wall to do anything about, but that feeling is dwindling away.    As you can see, there's nothing but anxiety out there for many traders.   Yup, we can feel that we are not the only ones who are feeling that way.      Perhaps, the notion of "levelling out" this market is becoming a much needed scenario as oppose to just a theory.

Are most traders looking for a break out of the recent high and head to SPX 1030+?  Lots of views changed these past few trading hours.  We just aren't sure if there's enough excitement/enthusiasm out there to push for such a move just yet.   A close over 1005 might just be an end to this correction for technical aficionados.    We want to put new money to work, but we want to see some noticeable rotation.  Yes, financials have played an integral part in this squeeze and we do think they will lead the market in it’s next leg up as we’ve discussed here.  Only thing is, we think it’s a little early.  We may be wrong and this is truly the start, but we‘ll wait.

What we have here then is a standoff that'll probably take a major catalyst or two in order to conclude.    Today's Philly Fed number is what we were looking for, but we are in a state where the Eco data continues to give mixed signals.   Everything went to DJIM script,  Asian market finally rebounded last night after some dreadful action over the last few days, individual stocks played catch up (great breadth) and outperformed the SPY and Phily Fed # was the right medicine.  Unfortunately, scripts get re-writes and we’re not stock whisperers to get our way on most days.  Let’s just say,  let the weekend come with a close over 1005 making it a bullish reversal on the weekly chart.

Some of the plays on our list don't look that bad and seem to be a setting up for a move.    Those plays that are above 9 ema, as we have mentioned before, are all looking like they can follow this market to higher ground.     Tomorrow is likely a quiet day and all eyes are on next week heading into the Labor day weekend.    Again, we are hoping that this market holds its ground right till the Labour day.    There's really no point to break out when there's probably not enough traders around to give it a concerted effort.    We are at this point keeping our "buy on dip" mode and we are willing to get aggressive starting at SPX 990.