The market is getting unbelievably predictable, with another morning drop and a rally the rest of the day. The only real challenge is guessing which sector is going to lead the way up. The trouble is, once the market gets predictable, it has a tendency to change. I have been expecting a mild pullback, and so far that is what we are getting. Even more bullish is the fact that the market is closing well off the lows, which could be an indication the big money is buying. Also Bs that the market weakness is being accompanied by low volume, so no one is rushing for the exits. Right now I am expecting a pullback to about 1220, and most likely a move up from there. We can only wait.
I had been bemoaning the weakness of the Nasdaq for months, but that weakness is done. Even with price dropping, price relative is rising. Until price relative starts dropping, I would say it is safe to say we are not going to have a major correction, and the lack of distribution days indicates we won't have one for quite a while. This was definitely not the January I expected.
The price relative of the Dow industrials has stopped dropping. That is about the only bearish indication I have found. Seriously.
The Russell 2000 was a little weak today, and the price relative did drop a bit, but the up trend is intact. I suppose I could torture the pivot points to come up with a lower target price, but at this point I don't really see any point to it.
There is one day left in January, the month I expected, if not an epic collapse, at least something of a collapse. It did the exact opposite. I am sure glad I'm not like some other bloggers (who shall remain nameless) who won't admit they were wrong and stayed short the entire month. PPT, HFT, QE, or whatever the reason, I trade what the market does, not what it is supposed to do.
I will have the new highs update shortly.
