We've poked our head a bit higher than the highs of yesterday (S&P 1117) on the opening flood of buy orders; a small positive there. The last 2 sessions have been marked by new highs as the market poked its head out of the box, and then reversals back down - so it would seem unlikely for that to happen 3 days in a row.
Now traders will focus on S&P 1120 which is a 50% retracement of the entire bear market move down from October 2007 highs to March 2009 lows. In English that means we have made back half of the move down in points, which to certain technical analysis is a key point (Fibonacci fans are all over this one) [Aug 5, 2009: Fibonacci Calls: the 38.2% Retrace is Approaching]
Since I've been burned the past two sessions buying the breakout, I will wait for 1120+ but as I have been saying the past few days the bigger the base, the larger the move. Hence, if the move is up there should be plenty of upside to go in the weeks to come after a 3+ week base. In the past month or two so many of the day's gains have been made in the first 30 minutes and then the market just goes sideways as HAL9000 churns the market, collecting rebates for providing liquidity.... but for the rest of us, there is no opportunity as the market goes sideways from 10 AM onward.
Small caps, while still a major laggard, are poised to break out over recent highs if they can jump a bit more, which would be much more comforting to me as I search the fridge for more Kool Aid.
Strong dollar, strong stock market? So very old school... I like old school. But can a return to normal last?
Days like this call for a special appearance... he's red, he's round, he's joyous, he makes you forget that Dubai was just 1 week ago, and he's 7 feet of buy orders.