The Daily Dose of Trading Comments

Momentum and fumes is what this market is running on now as another low volume push higher just raises the frustration level for most players; this one included. There is clearly a feeling that those who want to be long do not feel long enough and those that are short feel too short. That's what happens after a long decline and disbelief. It's then when momentum makes itself most evident and as a trader I should know this by now. I've been bitten by the momentum train before either pulling winning positions too early and/or counter trend trading too soon. I know better yet the disbelief that it can carry further makes ones reasoning somewhat clouded.

This push higher on low volume truly suggests that this is a rally without legs. Regardless of that fact, these legless rallies can carry longer than most expect and the current one is doing just that. What will happen is that we will find a day soon where the buying finally dries up because those who are fueling the move higher (the ones covering shorts) finally have killed off their losing positions and the move collapses of its own weight. A quick sharp drop down is expected as a result.

That drop will be met with further buying as the Johnny come lates fill in to take positions. I say all of this because I've seen it too many times am I'll be darned if I trade it wrong this time around.

Yesterday I laid out the latest thoughts in the evolving thesis. I wondered out loud as to how far the advance could carry and considered another 10 to 15 points higher on the SPX to be a good number. Today they added 5 of those points. Look for the collapse sequel to follow soon.