KARAOKE ELBOW MARKET

The market is jerking us around today, although the bears certainly missed an opportunity early this afternoon to break us down. Given the sharp advance we have seen this week, this type of action is largely what the bulls were looking for. However, I do not want to jump to conclusions just yet. There is plenty of work to be done to tighten up chart patterns and set the stage for a sustained move higher.

One of my longs inside 12631 has been FIRE. I sold out of it a few weeks back for a win, and recently added it back. The reason why I remain so enthralled with the stock is because of the long-term viability of the chart. In addition to being a low float/short squeeze play in a hot sector, not the breakout from long-term resistance. Even as the market broke down last week, FIRE never really gave up the goose. That nasty shooting star candle two weeks ago seems to have been stopped in its tracks, and the stock looks to be on its way back higher.

If the market continues to improve, cybersecurity and FIRE are where I want to be on the long side.

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After violent gaps in either direction over the course of the past few weeks, it is refreshing to see a more subdued trading session, thus far today. I fully expected overhead supply to be a short-term issue for the major indices, seeing as we gapped in a V-shaped manner directly into the symmetrical triangle from which we broke down last week. However, the manner in which the market reacted to that overhead supply would be telling. If today’s action is any indication, an orderly, properly behaved market has a chance.

I am sure it is too early to definitely say that we will digest yesterday’s gains peacefully, but the first hurdle for bulls was not seeing it all fall immediately apart via a down 3-4% session this morning. Underneath the surface, it is a mixed bag, with financial the clear laggards, while retail/consumer discretionary/select tech holding up reasonably well. I am still net long, and my lone short AAPL is putting me to the test today. I am looking to see whether the declining 20 day moving average for Apple now acts as resistance, on a closing basis.

From my vantage point, the bears will want to make a push this afternoon to fill some of the air pockets created from yesterday’s huge gaps across the board. The longer they are unable to do that, the better chance the bulls have of working off the V-shaped bounce into overhead supply via going sideways.

Get up and accomplish something today. Even if it means building a super meth lab in New Mexico 😉

http://www.youtube.com/watch?v=4CAWBGv4ErE

Direct Vimeo Link Click Here

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I am keeping a very open mind about this market, as we squeeze into the close bell of this dramatic trading session. I see many sloppy daily charts, but then again a bunch of weekly charts are suddenly looking better. The main thing I am certain of is that the bulls have more heavy lifting to do in order to get a sustained breakout. I am content to methodically leg back into the market on the long side, should they follow-through to the upside.

A good example of what precisely I am referring to is the chart of the IYR, ETF for the real estate sector. Note the potential for a solid, symmetrical inverse head and shoulders bottom spanning several months. If confirmed, you are talking about a very big measured move higher. That is a big “if,” but it puts me in the position of respecting its potential. You can see the shades of gray that this market makes you consider.

More on the recap after the bell…

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