So what do we have here?
Based on the daily SPY chart below, it does look like current price action wants to go up. Despite the fact that SPY is trading near the previous high of May 2008, the overall sentiment is surprisingly buoyant. Take a look at the 2 circles on the chart. The one on the left shows how price action has corrected to the downside after the consolidation has been complete inside the circle; meanwhile, looking at the 2nd circle on the right, you get the feeling that this consolidation appears to be an upside down version of the 1st circle. If that is the case, we may see a minor correction before price action screams higher.
Friday’s short-range bar only means that momentum of price action is slowing down a bit to catch its breath. But if you look at the momentum indicator at the bottom of the chart, you will see that the fast line has already taken out the recent steep downtrend trendline (red) and is on the way to take out the long-term downtrend line (purple). This turnaround on the fast line signifies that the internal momentum indicator has a bullish stance.
While others are saying that September may be a popular down month; just remember that we are all dealing with statistic and probability. Perhaps, just perhaps, September in 2012 will surprise all of us by being an odd month where price action continues to move up without looking back.
Of course, the above is just my weekly rambling market opinion. Regardless of my inability to see the future, I must always be prepared to have some conviction to wager in the market place. On the other hands, deep conviction in the marketplace can either be very profitable or very dangerous. I opt to stay in the middle if I can; if not, my trigger-happy finger will move me back to large cash position in a NY minute.
In short, don’t believe what I said; just follow the price action.
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