Market Sentiment

Today we have rumors of Gadhafi surrendering and leaving the country, because of the uncertainty of a military operation, this should have sent the market higher. As an brief aside, the last market update I showed you the 1 min (intraday bounce) positive divergences and said we'd probably see a move down first before they moved up (another take on the false breakout on a micro scale)-that seems to be happening now.

I digress, so why s the market not trading higher?

QE2 and whether it makes it through it's planned expiration as the Fed's Fisher said that he may vote to end QE2 before it' planned expiration which does not bode well for QE3 and the market DOESN'T like this. The market has been surviving on stimulus and QE spending since 2009, the hint that the music may stop and we may not get a QE3, in my opinion, is being discounted by traders today. Otherwise, I'd think the market would be trading higher on the MENA/Libyan news.

We'll see where this goes, but the charts have not been healthy looking since that wedge started on the daily charts back around January-mid-February 2011. The SPY is down .5% over the last two trading week, compare and contrast that to the recent QE trade/market melt-up. We haven'e seen a dip like that or trading that hasn't melted the market up since last November. This to me signals a definitive change in character in the market. Tops are tops and volatility is synonymous with them, but look at a 2 or 3 day chart and the action or lack of it becomes pretty clear.