THE MARKET WANTS TO HURT THE MOST TRADERS

What was the intra-day high on the S&P 500 today?...1007. I told you there was a bit of resistance there (11/4/08 high). The buyers rushed back in again during the last 15 minutes of the day. Every time the market pulled back the smallest bit, the buyers took it higher. If we break 1007, we could get another big move. If you can't watch the market tomorrow, set up contingent orders so that you can play the possible breakout. On the cautious side...and I do have a responsibility to be cautious sometimes...I am concerned with how bullish the "crowd" is getting. For those that have taken my Elliott Wave course, you know how important it is to analyze crowd behavior. This clue is more advanced than the clues we use to analyze trend. It's a lot more intangible. We know that the trading crowd gets most confident at or near a market top. Almost every trader on the financial news shows today believes that the market is going higher. Almost every website is talking about how much further we can still go. The only ones that appear bearish are the ones that we know are short the market and we can see the stress on their faces as they try to give reasons why the depression is still around the corner. I've been through this a few times before and it feels the same every time. You feel like there is no way it can sell off right here because EVERYONE feels it is going higher. The reason why we are all bullish right now is because we are all long the market right now. We wouldn't be long if we didn't believe that we could go higher. The problem is that if there isn't any new money that can come it to "keep the party going", we will inevitably begin to drop. There are reports that some fund managers, that have been in cash or have been short the market, need to buy in right here so that they don't get left in the dust. This could extend the mania for a bit longer. This is why we will watch for the 1007 breakout. I want you to really pay attention to what is happening in the market right now. This will be a very valuable experience if you pay attention and feel the emotions. Listen to the predictions and how many people believe the predictions. Watch the price movements to see the buyers rush in during the smallest pullback. Take all of it in and remember this...THE MARKET WILL ALWAYS ATTEMPT TO HURT THE MOST PEOPLE (traders). I know that sounds sadistic...like the market is a living breathing thing...but that is one way to know what move will likely happen next...it is the one that will hurt the most people. If traders have bought 200,000 contracts of the August $15 call, then that stock will probability shut down at $14.95 on expiration Friday just so those speculators would lose on all those contracts as they expire worthless. My first warning signal is a sharp move below the 5 day simple moving average. I may start to cash in profits. If we sell off sharply at the end of the trading day and close below the 10 day exponential moving average, I think we might looking at a correction underway. Build cash if you can.