THE CONSUMER HAS CONFIDENCE

The market was up big today...in part because of an increase in the consumer confidence index. Consumer confidence is an important long term sentiment indicator. When consumer confidence is falling, the investors become more conservative and less likely to take risks. When consumer confidence is rising, investors become more confident and are more willing to take risks. It is not a great short term indicator of the market. The argument is that the latest rise in consumer confidence is due to the March to May rally in the markets...not necessarily that the economy has turned around. That is a valid argument and we need to consider that possibility. The volume has been pretty light over the last several weeks. This makes both the rallies and drops a bit suspicious. It seems to me that there is still a lot of money on the sidelines that is too scared to get in right now. The VIX gapped up (above the resistance level we were watching) before dropping back down as the market rallied. That spike above the resistance line has me concerned and caused me to be suspicious about any follow through to today's rally. On a more bullish note...there are still a lot of possible bullish ABC patterns out there and we should cautiously trade some of them. The bank stocks staged a bit of a rally today...and it could continue if the VIX continues to drop. FEED made a nice jump today on huge volume. It has already moved up pretty big over the last few days, but there is strong resistance at $8 so it could move up two more dollars before coming back a bit. This could be an example of chasing a stock, but I just feel the momentum could carry it a few dollars further in the next few days...and that's all we need sometimes. CTB had a nice move today on higher volume. Technology really had a big day. The technology patterns I like are: MRVL, RIMM, PCLN, ACM, and AAPL. Other bullish patterns I like include WRC, ACF, WDR, KEG (if it breaks above its 200 day MA), MDRX, HSP, and JOYG.