After looking at tons of charts this weekend, it seems that today's close is really critical for direction to this market. A red close is likely as we are still at overbought levels and meaningful correction hasn't really occurred. The recent feisty rally was triggered by shorts that panicked and covered quickly on some good news from Meredith Whitney and GS, INTC & IBM earnings. The real correction is still in the cards. Gold and commodity-based equities like FCX, X, AKS, except UNG, are toppy. A strong green close with high volume would genuinely be a troubling sign for the fund managers that are under-invested and may actually trigger even more buying since they have to beat the benchmark, which will lead the markets even higher. Lets see what happens as the day progresses.
Update (4:30PM) : So we got a green close but on an anemic volume. Not sure what to make out of it. On a 10 year weekly chart, the 50EMA is showing at 962 for SP500. I think we are going to touch it just for the heck of it and then come crashing down. I certainly don't feel all that bullish although I have a neutral portfolio at the moment. Long KCI, CAH, SUN calls and long SPY puts.
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