A Member's Question

"What do you think the most likely outcome is for the rest of the week?"

My first response was you have to assume the trend of lateral volatility will continue, but on second thought.

Look at charts like these...

GOOG has broken down, we know it is HIGHLY likely we'll see a false move above resistance (former support that broke) as we almost always do.

AAPL is not as good of an example, but it's been down and one last false move would be great for the locals to set shorts, especially given the position of charts like GOOG and there's a bunch more like that, I just want to get this post out to you.

Here's the market..

IWM with a slight positive divergence

And here's how close it is to a new false breakout

QQQQ showing a few positive divergences

This one probably won't make it to a new high

SPY with a few positive divergences

And this one is very close to being able to put in a new high

While there are no positive divergences in DIA, it's close enough to put in a new high.

So looking at some bellwether charts and their recent breakdowns, knowing how the market reacts after those and how close we are or the locals are to being able to put in a new high on a false breakout to slaughter the longs, I'm starting to rethink my original answer and thinking that this week is as good as any for the locals to go ahead and shoot the market to a marginal new high. This isn't something I'd buy, it's the strength I've been talking about that I'd use to enter shorts. The overall market looks horrible and they know it too. If they can use a new high to establish shorts and naked shorts and then use the "Buy the dip" herd of sheep to go along, then they can set up a drop in the market with ZERO effort being we are so close in most averages.

I think I'd be on the look out for that the remainder of the week, I doubt they'd want to hold long over the weekend so maybe even tomorrow. I personally would use the event to get my shorts lined up, or at least get my toes wet and as I've been saying, just like Bill Gross, I'd be raising cash , getting out of longs, getting off of margin and just being patient and understanding much of what you see in the market is a lie.