In my opinion, which is no better than yours i admit, the market is not rising so much in anticipation or even evidence of "recovering earnings" as it is in response to a weak dollar. It looks as though the dollar may be near a bottom for the time being, so even if the market response is more related to the dollar than earnings, you may see the temporary top you are looking for. I'm not shorting the market here, however, i'm watching. I would think any top will take some time to develop, and we can anticipate greater volatility. However it seems there is still reluctant "burned child" money sitting on the sidelines --late to the market as usual-- , and too, Fed action can surprise us. Sooner or later the Fed will have to raise interest rates. Then I would think we will see a more significant top. (The dollar looks to me as though it might have made a double bottom == 11/23 2009 and 10/18 2010 == and the dollar may be headed back up, but regardless the dollar is still weak. )
What you have in play is a "carry trade". Fundamentally, the Fed hands money to the Banks who in turn buy the Indices, which in turn go up. This in turn has created a disconnect from the stocks that go to make up the Indices. How much more fundamental can it get. One day, the market will hung for a while and then retrace. But if it does not recover, then the 30% of the US population who are now connected to Wall Street and largely disconnected from Main Street will stop spending and the GDP will tank. And so fundamentally, the Fed will not stop hand feeding the "carry trade" until the economy can support itself again. It is all in the fundamentals, which means that the technicals can be used to trade with the direction, which is UP UP and UP. Yes, of course everything is subject to change ... one day
-added to my short @ 1329 /es. Also started selling VIX puts and buying some VIX calls for various timeframes. Im enjoying seeing the extreme light volume today, but heavy volume on sell side as it looks they are startiing to initiate an unload on the way up. They even mustered the ability to make it close tiny positive to give the resemblance of up market while AH400-415 they brought it back down with good volume once again.
update import/export prices came out, showing increased inflation which is to be expected considering the inflation china, india and the uk are facing. At the same time retail sales were below consensus .
update really like the price action today, i was interested in seeing how the market would respond once it got to the 29 area, if this occured anytime in the last month it would have gone to new highs so its definatly a sign of weakness. Like the follow through on the sell off of XOM, almosted shorted that this morning but did not. no big deal though. I have a feeling tomorrow with the PPI data coming out is really going to push this market.
david-on the money with XOM. That last surge up serious cause for concern as oil really being manipulated in Europe with the wti/brent spread. Like a final hurrah! to juice the markets haha I managed to short some heating oil futures this AM as the discrepancy was getting ridiculous based on weather, crude, etc. -T
update considering where gapped up odds favor a trend day up. However the odds are not as high as normal strictly because we are so overbought imo. I feel the chances favor a slow grind up all day. As a daytrade it would be worth to buy the dips today. Longterm, however, I am losing confidence in this trade however I will stick with it because of the system, reward worth the risk.
no stop is still at the 55-60 area, in reality the entire zone is rather big encompassing 30-70 however the majority of the strength was at 30-50 which is why i shorted here, i still will be out at 60 and admit my defeat. But like i said odds are for a grind up day, if that fails and we break down below 30 we could see a swift fall. but at this point the odds are very clear, go long any test of 1330-1332