Sentiment Changes, Yet the Range Remains

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You can see on the daily chart above how quickly we gone from the bottom of the 1120-1220 range on the S&P 500 to the top. That kind of a straight line move does not happen very often, even off of major bottoms. We are where we are, though, and the pressing issue remains whether to chase this market higher, right here right now, or instead exude some patience for things to settle down. To be sure, the mass psychology of the market has shifted dramatically, not in terms of anecdotal evidence but rather what is being reflected in the price action. The fear of a crash has suddenly morphed into a fear of missing out on an epic rally.

In spite of all the changes we have seen over the past week, we remain in that 100 point S&P range. At some point, that is going to break. However, as this “melt up” gains more attention, I suspect we will have a battle on our hands before that happens. I do give the bulls the edge, though, given the constructive action in the financials and many other beaten-down areas of the market that still have plenty of room to rally.