Bears got in trouble again today. If you play with the crowd, expect to get trampled at times. Sentiment was so universally bearish, you knew something like this was bound to happen.
We are fast approaching some short term resistance. QQQQ has a gap to close from July 3rd at 39 and with call resistance between 38 and 39, we could be near a top for this week. Next week is a different story. COMP has broken out above the June descending trendline resistance and neckline of inverted head and shoulder (see my previous intraday post) SPX is back above 2003 bull market trendline (chart). Support is at 1285/1286 and if we hold that going forward, there is actually (heresy) a chance that we might retest 2006 highs if we get a close above 1301.22, which is not a given since we have failed there before. Nevertheless, quite a turn of events. In any case, if we settle above 61.8% 2006, it will be hard to keep calling this a bear market. Before one gets too excited, let me remind you that in 1987 we did exactly the same thing: a tough correction in the spring and a rally to new highs in the summer followed by a collapse all the way into December. I'm not saying we will repeat this scenario, but if we hit new highs in the next few weeks and everyone gets too optimistic, I would step aside. For now, there is room to grow. The weekly oscillators have some air above and the sentiment is cautiously optimistic with enough of a wall of worry to keep us going.
This entry was posted
on Wednesday, August 16, 2006 at 5:22 PM.
