ONE MORE MOVE UP?

The market was down once again (100points) and the buyers came in and caused it to rally back up. This resilience can't be ignored. The more the market moves sideways here, the more likely it is to have one more push up. Tops are usually formed by an impulsive move up, followed by an impulsive move down. In other words, they tend to reverse sharply. We have bumped up against resistance for the last 3 days. The pattern has been sideways. Whenever you see a stock start to move sideways, the higher probability is that it will continue to move in the direction of the previous trend. Since the previous trend is up, I think we could get one more move up. If we do get another move up, be prepared for a sharp reversal. In other words, don't buy in big if we breakout here. I still think you should buy, but buy in very small amounts so that you don't get your head taken of if the trend suddenly reverses. I thought we were getting our sell off earlier in the day. The VIX moved up and the market dropped very quickly. Then it reversed and almost finished the day positive (the Nasdaq was positive). There is a possibility that we still sell off and finish a correction, but I would say that the higher probability is that we continue to push higher in the short run. Watch the 2000 level on the Nasdaq and the 1000 level in the S&P 500. If I was looking for a sharp reversal point during an overbought market, I can't think of a better place for things to reverse. Be ready to buy in if we breakout above the recent resistance...the resistance over the last three days. I don't see a lot of individual stock patterns that I like right here...at least not for new entries. I think the smartest way to play a breakout...if we get a breakout...would be to play the DIA, SPY, or QQQQ. You could also try some of the leveraged ETF's like the BGU, MWJ, or QLD. The key is to wait for the breakout. I could be wrong and selling could begin right here. Ahhh...to know tomorrow's move today...wouldn't that be nice? Remember what I always say...trading is about managing probabilities, not predicting the future. If we breakout, the probabilities say we are moving higher. I will reiterate what I said yesterday...the easier money will be made to the upside in this current market. Buy breakouts or wait for pullbacks. Don't try to short this market...at least not until the market tells us to short it.