Today is Monday April 27th and I am sure we saw some reactions to the week end news.

Today’s market had a catch up reaction to the week end news of Swine Flu that seems to be popping up. When the market opened up on Sunday afternoon at 3 p.m. West Coast time, it did not take long for the futures market to react to the news. It gaped down about 3 points and then continued to sell off over the next few hours to -14 points, then finally stabilized and started to make a come back. At this morning’s open, the first reaction to the cash market was to catch up to the futures, so they also dropped until meeting together. After being rejoined, they started to make their move back up.

I started to trade a little bit after that, somewhat at the top of the rally. I was in the chop. This is usually no problem and it wasn’t really today as well, but I could have done a little better. When the market stages a nice long rally with a few waves to it, usually it likes to take a rest and consolidate its gains. If you come in and look for continued extended moves, you may be disappointed. Well, I had some of that, but I found my footing rather quickly and squeezed out a few small gains there in the middle until I saw some really nice setups and took those easily, to top off my day and reach my daily goal + around $1,100.

Good news on the market sentiment numbers. I just checked them and it seems that they backed off by 4.1% to 39.1%. This is putting us closer to the 35% bullish number that can spark big rallies. What this says to me is a lot of people got bearish last week, thinking that this market was about to drop. It is interesting, because last week I was feeling like the investment community was getting ready to try and sell this rally off and that is showing up in the decrease of bullishness on the street.

To me, it seems like there is more to go on the upside. I could be wrong, but I don’t think THEY are willing to let go of the increases that have built up in the last weeks. I just get the feeling that THEY want to pump this thing up and draw more and more unbelievers in to the arena and until then, THEY do not want to give up any meaningful ground. When the last player is in, at the top of this reflex rally, then THEY will pull the plug and you will see a very powerful sell off, like we have not even yet seen. This is my opinion and no one else. I have many reasons why I think with is so, but now is not the time to go into that.

One other thing, you might be asking, who is the “THEY” that I am referring to. Well, the THEY could be many entities. One can speculate and come up with a few, but I am a little hesitant to say. I will give you one easy one. The market is made up of individuals, some small and some very large. Even the institutions who trade are themselves individuals who are responsible for very large numbers. Psychology is being played out here before our eyes. It is the market’s job to make you do the wrong thing. If it were to tell you and everyone else what the right thing was, then no one would be able to make a profit. So, the “THEY” can be a collective group of traders in “The Know”, who are  exercising their intent to perform mass mind games on the rest of the people who don’t know how the game is played.

That is just my insight on how I see things. So the moral of story is, find out how the game is played and be one of those traders who are in “The Know”, or else you will be left outside by yourself, with no one to play with.

http://www.screencast.com/t/KQnUxwIx6V Today’s equity chart

Related posts:

1. Market Reacts to Bad News with Sell Off
2. Market Indexes, Holding On To Their Gains
3. Market Drops Off as Sentiment goes with it
4. New Highs for the Market again, market call on target!
5. Stock Market puts in Reversal Day

Tags: market sentiment