This market wants to go higher. Even AAPL’s current weakness is not masking this. After this 2 ½ week rally, the market could’ve gone either way at the 50 dma. But we held the gains and it looks like there is less resistance to the upside. Historically, seasonality also favors this conclusion.

 

The short side is higher risk. But the choppy environment is making both going long or short difficult and unpredictable. Interestingly, the charts currently look better on the short side, than the long side. Maybe this implies the uptrend won’t have legs through the 1st quarter next year.

 

There is a constant stream of news stories to which the market tends to overreact to every word. In my opinion, the commentary coming from Washington is purely posturing and political, not substantive. Uptrend or not, this is not our kind of market and we need to remain cautious and small until a new trend is made more clear.

 

Best returns,

 

Scott O’Neil

President, MarketSmith Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil