Face Mask

This market is defying the odds.  Past statistical studies are useless in the face of this uptrend. Any attempts to fade this move by shorting have been beaten down relentlessly.  The bear's face has been ripped off so many times over the past 4 weeks, he should be wearing a face mask while he trades.  That is what happens when the market goes straight up for 95 points.  This market acts in ways that defies past history.

After an extended run up into the NFP, the market tends to have a kneejerk reaction in the direction of the trend, which is obviously up.  Ok, the market followed that tendency there and I avoided being short ahead of the NFP.  I figured I was given a golden opportunity to short above 1130 and went in expecting the usual fade move as it usually happened in the past.  The sellers were ghosts, and the buyers had to pay up again and the market went grinding higher again.

I doubt this market has the fuel to keep going higher. It seems very odd after such a sharp correction that we had in January to be able to go straight up.  Those instances are not that common so long into an extended cyclical up move in a secular bear market.  Unless this is a new secular bull market, this kind of action shouldn't be happening.  Also, stocks are not cheap.  They are a bit overvalued based on normalized earnings.  And there is no retail fuel to push this higher.  The only source seems to be Fed induced liquidity at the big banks that are finding their way into stocks.

Now that we are near the top end of what I believe to be a trading range, many bears will feel a bit uncomfortable fearing a breakout and a run to 1200.  But I will play it like its a trading range from 1040 to 1140, which means I will be leaning short around these levels.  Sentiment has room to get more bullish, but the bearish levels are pretty low right now.  I actually believe sentiment can become more bullish while we stagnate at these levels.  That would be the ideal scenario for me to get aggressively short looking for the next down leg which should take us to the 200 day moving average.