Lots of news today which will be revealing of the nature of our new bull market. If the Bull is back in full charge any bad news will be absorbed without any real reaction. The earnings season has started very strong with better than expected reports from Goldman and Intel setting the stage for a financial and tech rally. The bars have been set for the other companies and we will see how they perform.
We are facing a gap up this morning as a result of the Intel announcement last night. While we are invalidating the Head and Shoulders boogey man set up days ago with this rally, we are also starting to get into overbought territory on several indicators so I would expect some selling either this afternoon or tomorrow.
The ZB indicator currently stands as looking like this:
Technically speaking we have not broken the downward momentum pattern setup starting at the beginning of May. If today’s open holds and the A/D line stays higher than 2:1 on the NYSE that should be enough to push the indicator over the trend line, which to me would be more evidence that the bull has returned and that our strategy moving forward should be buys on 1-3% pull backs.
What could stop the current stampede? Exhaustion for one thing. The bulls are a little tired from the March run up. Another possibility is that with the early pacesetters in earnings (GS, INTC) we have setup a possibility of the market becoming disappointed when earnings don’t exceed expectations and whisper numbers for other companies. Economic news and there is a lot of it today can either act as a drag or a propellant.
Either way, it will be nice to get the noise from OPEX out. The market pinning during the day drives me insane as I like to scalp to keep my head in the game and it impossible on these OPEX weeks.
In the traders room we are in a little bit of a hole in the traders account. If I know Tom like I think I know him, (I haven’t talked to him since 4pm yesterday), I am sure he has been thinking all night how to work his way out. There is nothing more fierce than a natural bull acting like a bear caught on the wrong side. I am sure trading will be fast and furious today in traders as we watch Tom masterfully trade his account to get to profit. I would recommend being in the room today if you can.
Here is a quick link that will launch the PalTalk Express Flash application and bring you into the room:
http://express.paltalk.com/index.html?gid=1088749347
Happy Trading!
-rlt
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