Morning Perspective

The bears are right once again.  They've been' right' every single dip all the way to new record highs.  Don't get me wrong, I'd be cheering loudly for this bull market if it wasn't built upon the backs of future generations.  But price is price, and price has been heading higher for over 8 years, market crash pundits be damned.

Every top call for this market, every single one, going back to when Cavemen traded rock futures, has been wrong.   And yet our first 1% pull back in 100+ days, has the bears cheering being right for 1% after a 270%+ rally.  Which is exactly what this market needs to head higher.  More of the same disbelief.  More of the same excuses.  More of the same Unicorns and Rainbows:

What Happens When This Myth Bull Market Gets Real?

After yesterday's sharp decline, is this "myth' bull market dead?  No.

Has the Market Topped?

But we need to keep a close eye on a few things to see if there is more bite to yesterdays bark.

Momentum has been waning for several weeks.  We were seeing new lows surpass new highs more frequently the last few weeks.  Price Momentum was starting to turn as I pointed out in the chat room two weeks ago.

Also small caps were trading week.  After leading the market out of a 9 consecutive session decline heading into election day, Small caps have been on fire, until recently.

I don't think its any coincidence that we saw numerous record highs yesterday on names like $FB, $AAPL, $GOOGL, $AMZN, before the market began its pull back.  Profit taking surely was to blame for some of the move.

Two things we need to see from this market to let us know the pull back is over.

  • First let's watch support on $IWM.  $132.50 has been channel support.  While we could bounce from current $133.50 level, I'd feel more confident going long on a test and hold of $132.50 support.

  • The VIX needs to stay under 13.  This is a level is has failed to break and hold above.  The VIX has been the guiding light for this market.  No fear means higher prices.

We had a single digit paint of the VIX earlier this year for the first time since 2007.  I still think that figure gets hit again later this year, which means like all dips since the dawn of man, this dip will ultimately end up being a Yuge buying opportunity, and market participants will continue to ride their unicorns  on rainbows to new record highs.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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