Have Some Pride

__________

Part of the reason why the market can keep going higher is because so many market players doubt the veracity of the rally. Many traders have resorted to acting as though they are in a 20 student undergraduate liberal arts class. They go around the room, raising their hands when their beatnik adjuncts ask them how they feel about the market.

In response, the undergads say things like, “This market feels off to me. My feelings and emotions are out of touch with it, ” or “Something just isn’t right to me. Like, OMG, It really feels shady and random and sketchy. I need to call my life coach and fix this major problem in my life because of this evil market.”

Folks, have some goddamned pride. You should be focused on rigorous analysis of the markets, and that should dictate your bias and portfolio allocations. Your feelings, if anything, should act as a contrary indicator. Better yet, do not play that game. Perhaps these “feelings” are nothing more than your breakfast sitting in your stomach the wrong way. Thankfully, I have never heard one of my loyal readers say something like that (because my readers are, pound for pound, as intelligent as any traders anywhere).

In my video over the weekend, I talked about the importance of being as objective as possible in your analysis. While we were consolidating last week, my strategy was to play along on the long side, but with a big cash position as a buttress because I felt the risk of trying to anticipate a major breakout was too high to go all-in long. Today, we have indeed broken out above 1131, and because that level was so significant over the past several months, as soon as we broke above it we saw a “woosh” effect up to 1142. How much higher can the market go? Well, the first target would be 1150, the key resistance area dating back to at least January. After that, look for 1170, which marked the tough resistance that turned the market away after the flash crash.