Well…we’re at the moment of truth. The market is at a crossroads, and it could go either way. We’ve been up 5 days in a row and the prior four have closed at the top of their range; however, volume has not been powerful thus far. None of these days have been on above average volume. The market recently became very negative and was a perfect setup to bounce as we have this week. We’re at the upper end of the overhead resistance levels. For the market to prove my negative stance wrong, we’d have to clear this upper area of resistance, consolidate and resume the uptrend in a meaningful way.   As we come out of that consolidation, it would be very positive to see volume (true conviction) returning to the indexes.

Should we continue rising through this key level and subsequent consolidation, I ask myself, “What is the upside potential being so late in the cycle?” It is probably minimal based on the historical research of the recovery phase of the last seven major bear markets. That statistic is located in this Blog.

Most likely, we will get more back and forth sideways action. At this point, our most important priority is defense. Do not give back profits. In the end, I only care about what the equity in my account is telling me. My equity is like a good spouse, I always know where I stand. Remember, there is no bull or bear side; just the right side.

Best Returns,

Scott O’Neil
MarketSmith Incorporated

Follow me on Twitter @WScottONeil