Planet Wealth

The market opened big to the upside following big overnight move lower for the dollar.  There was some good economic news as well, with existing home sales posting a little better than a 10% gain.  There is some confusion however regarding how many of those sales were from investors taking advantage of buying foreclosures and then putting those homes back on the market.  Those actually count as "existing" home sales.  There is word out of Las Vegas however, that they have more buyers than inventory.  It's those type of stories that will eventually cause the housing market to turn back to the upside.  One isolated area is not enough.

Early trade was about it for the day as from 10 am on the market slowing fell back.  At the same time, as expected the dollar also slowly began to rise.  This is a holiday week, many traders take the entire week off and there just wasn't enough volume to drive the market even higher or even hold the 10 am level.  When you have a big gap up on the open like this, you wait for the gaps to be filled and then the market tells you where things will go from there.  In today's case, once all the gaps were filled, the market never even really attempted to move back toward the morning highs.  We had a slate of trades ready to go, but it was important to see the market close back above the 1100 level.  Usually, when a resistance level is taken out but doesn't hold, you watch to see if the market then goes back up to that level as a test or makes another run at a breakout.  Today was still a good day for the bulls and the fact that the market did indeed close back above 1100 is a positive sign.  That could set up the run at 1200 in the coming weeks, but remember we have to proceed with caution at this point looking back at the history of the market in 1930.

As discussed in last week's webinar, a good indicator of market tops and bottoms is the Bulls to Bears survey from Investor's Intelligence.  Currently, the Bulls are at 44% and although in the higher end of the range, not the level that usually sparks a sell-off.  The Bears are at 26%.  Any reading above 35% on the Bears is very Bullish for the market.  Therefore, the current reading is in the lower end of the range however not at an extremely low reading that would normall spark a sell-off either. 

Baring anything unforseen early in the trading day tomorrow, we will look to make a committment with some new positions.  Have a great evening.