After Monday's big surge, we saw almost no selloff at all Tuesday and Wednesday which you simply have to respect. A market who consolidates big moves by going sideways rather than falling back is not one you want to stand in front of. Just moments ago the S&P breached S&P 1140 and the move out of the base the index had built for 6 weeks (S&P 1085 to 1115/1120) continues. I continue to believe we have a 7-10% move out of this base which would take us somewhere north of S&P 1200, and I've put my money where my mouth is as this is the most net long we've been since March/April 2009. My worry is my view has now become consensus - but that has also not stopped the bulls.
Further complicating matters is the jobs data tomorrow. It really does not matter what the actual number is, all that matters is the reaction to the number. Even if I knew job gains were to be +35,000 or job losses -35,000 I have no idea what the market wants. Does it want stronger numbers because that means there is recovery, or does it want weaker numbers so that easy money can flow for yet another 12 months straight? Who knows.
We have about 90 minutes left in the session; if the market can surge to close out the day I plan to lower my index long exposure by selling into strength ahead of a lemming reaction tomorrow morning. That won't change my view that we indeed should have more upside to go in the near term as Nov/Dec 2009's box (base) was the first one the market has built in over 2 years... hence a powerful move should ensue.