In the first hour of trading, the market looked like it was on the brink of a meltdown. A lot of stops were triggered as big-cap technology and some of the recent momentum favorites struggled for the second day in a row. Then we found some support, and it was all positive after that. There were a tremendous number of reversals today. I heard many complaints from traders who watched their positions skid pass stops, then flip around and go straight back up.
What has been so amazing about this market is how quickly the mood turns positive after a brief bout of selling. It's easy to feel foolish in this environment when you are disciplined and adhere to stops to protect gains.
Things will get even more interesting after the close Thursday when INTC reports earnings, followed by JPM on Friday morning. With sentiment so positive, expectations are likely to be very high. There is a greater danger of disappointment now. Still, this market has been consistently optimistic for many months.
One of these days, the market is going change character, and the bears will finally have the top they have been waiting to see for so long. Today was not the day. When we have run up as high as this market has, it's hard not to think about when we might see the top, but that sort of thinking has been the most costly thing you can do......
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