Add another reason why I hate this market, regardless if I am making money or losing money. The market is curling up like a high pressured spring. Something very large is going to happen in short order and there is little way to determine what that move is going to be in the short term. As a result, you have know your right in the longer term and manage the risk (which means lowering potential gains if the market does move your way in the short term) so a sharp move against you in the short term doesn't destroy you.
The market is torquing. I had been thinking for days that the probability would be it would break higher. The severity of the move down yesterday with the drop in the Euro made me think the probabilities had changed. However, like I said last night in my post, I was very unhappy with the way the market closed. There are two major trendlines in play right now. The one coming down from the April highs. We have hit that one half a dozen times. We also have an upward trendline coming off the July lows. These are coming together forming a sideways triangle. We hit the upward trendline yesterday before rolling over and basically hit the downward trendline yesterday during the sell off. The space is becoming very narrow and one of those trendlines will break very soon. Any move will probably be violent.
If we break higher, the built up pressure from scrambling shorts will send this market screaming. I still think it will be very short term (days to a few weeks) but that is how you get the stocks to move towards 1140. It will also cause everyone to get on one side of the boat again setting up for the fall.
The bearish case is we gap open up here (and we will gap big time)and there is no follow through. It gets us through tomorrow for the release of this European stress test staying below the big downward sloping trendline.
The bullish case is we climb above it and continue screaming above it. European economic data was really strong today. It probably has to do with the weakness in the Euro last month.
Adding to the bull case is copper is screaming higher again today.