Today is Tuesday, September 22nd and the investors bought the dip and we are back on top of the upper range. The momentum has turned higher and now we will see if the next day or two will produce the new breakout and sprint towards 1100 S&P and 10,000 Dow.

The market sentiment is allowing the move to go higher, because over the last few weeks, less market timers and general market followers have become less bullish. They feel that the market cannot go higher and is due for a drop, at least more of them do this week than last week. In fact the percentage has been going down over the last 4 weeks and the numbers are as follows. They are 51.5, 50.6, 48.3, 47.8. The last one was from last Tuesdays reading and has continued to decline. That will allow for more room for the market to expand before it comes to exuberant and falls. When you have skepticism like we are seeing in the face of a huge rally, that only add’s more room to run. It works in the opposite direction, because the majority is usually wrong. I will keep you posted on the numbers.

Below are the turning points for today in the 400 tick chart. This is about the equivalent to a one minute time chart. The volume was very light today and don’t think we even hit 1,500,000 contracts traded on the e-mini. I know the volume and larger swings will return, but it is not here yet.

I am very interested in how the market is going to handle hitting the 1100 S&P and 10,000 Dow. If we do see price rejection off of those numbers with a steep sell off for a few days initially, you more than likely will get a quick recover back up. So when the time is right, I will point out what to at least be aware of. It will be in that recovery back up that the we need to really watch. We will be watching volume on the NYSE and the ability to stay above that sharp pivot low. Usually at a top, you will see big down turn, big upturn and a failure or another breakout. It will be interesting.

I do believe this flu thing coming up will have an effect on earnings and could take the hot air out of the balloon on Wall Street. There is a lot of controversy over the issue and it is causing quit a stir. As of right now, it does not and has not been to much of a problem, but the powers that be, seem to think it is. This also should be on your radar to watch. The market very well may react to some event that suddenly makes things worse, what ever that may be.

One thing on my mind is the passage of the health care bill. I do believe the people at the top really want that bill passed. Most people know that it is going to cost them. I can tell you, Americans are not interested in shelling out more money one way or another. If they want to get it passed, I believe the stock market will have to stay up in these higher levels until that time. If we get the drop that I expect will eventually come, it is going to be a WET BLANKET for the passage of the bill. People will be screaming mad and more broke than they have ever been. So look for passage before the big drop. If there is no passage of the bill at all, then that to could send things down.

That may seem pessimistic, but if its true, isn’t that whats important. When, things are going good, they just are and the opposite is true. There is no recover as of yet. We may get one, but it has not materialized. The jobs picture is the worst in 70 years I just heard in California, over 12 percent and getting worse. The stock market always looks out 6-9 months out. Right now it is saying that a recovery in the numbers are going to start showing up. It may be that the numbers the market is reacting to are from the stimulus injected into the economy with no real staying power. If that is true and there is no real punch to follow up behind it, the air is going to come out and fast. We have all the ingredients for just such a reality. But as day traders, we need to look inside each individual day and find the  opportunities that exists, thats our job, thats what we do.

http://www.screencast.com/t/BDp915vYoDZZ            Turning points for 9-22-09  on the 400 tick chart

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1. Bullish Sentiment backs off- Room to Rally
2. Index’s Marking Time
3. Stock Market Recovery Bubble
4. Stock Market Buying Little Time
5. Major Index’s Currently at 62% Retracement Levels

Tags: bullish, turning points