Since the giant two day hyper-ramp (Dec 31/Jan 2), just six weeks ago, the market has remained in classic algo-bot melt mode. This is indeed not the first time we've seen this sort of action, and it has to be considered..could this continue until year end?
So..another higher high for both the Dow and the SP'500 today. Yes, the Transports and the R2K are looking a little tired, but still, the broad trend remains UP.
Even if there is a key cyclical peak sometime soon, its going to take some weeks, if not 2-3 months before we have any clarity.
Those hopes of a retracement...remain as distant as they were at the close of Jan'2nd.
The Feds POMO program has only been going since the start of the year, so I have to say, I find it really bizarre to see people already talking about QE3 ending. The fed could end it anytime they want of course, but still, I'd have to believe they'll let it run for 6-9 months at least, if not just keeping it permanent.
see POMO schedule, via NY fed.
This Thursday is a major POMO of 5-6bn, so it will be interesting to see if the market can ramp a little harder, perhaps into the 1540s by the Friday close - which is option expiration. The sp'1530/40s would certainly help to wipe out just about EVERY single one of the Feb' equity put options.
As for Wednesday, there really isn't too much to look for. Downside to sp'1510 is viable, but a break under that looks too difficult. There is open air...to the 1540s - as offered on the monthly charts.
For the remaining bears out there - and there can't be too many, these remain....'difficult' times. Sincerely...good wishes to those..holding on out there.
Goodnight from London