Many Members Of The Commentariat Are Trying To Anticipate A Stock Market Rally. Fools And Their Money.... Er, Fools And Other People's Money....

There really isn't any type of shorter term support until we drop another 40-70 S&P points. That would amount to a 12-14% correction. Maybe then we will see a rally from those levels.

Many have been covering short positions in anticipation of a rally over the last few days yet there remain absolutely no buyers. There are way too many market participants trying to anticipate market direction rather than listening to what the market is telling us - we see this dynamic all of the time and it is a sign of horrible money management in my estimation. This was what happened was on the reverse side when people started resetting their shorts after the March bottom and were repeatedly blown out of them. And the same dynamic that led the buy-the-dippers to get slaughtered in 2008. Right now, as of the close on Friday, the market isn't telling us anything that would portend a retest of this rally's highs. Big traders might come in and jam the market the first trading day of February, as is common the first day of any month, or any other day but until I see this short term algorithm turn positive, there is no reason to even consider that possibility. This same algorithm kept me out of the market as it was collapsing in 2008 and early 2009 as many pundits called bottom after bottom after bottom and were repeatedly slaughtered. I respect the market and never try to get too far ahead of myself with anything that the market doesn't tell me.

The behavior of this market has been incredibly odd for about four months - almost floating on an intraday basis. That is what the market looked like as we were peaking in 2008. It's an eery dynamic that makes me sit up and take notice.

Next week we will look at what the market is telling us on a longer term basis using a rather unique algorithm I highlighted on here in the past. What it and by conclusion, the market is telling us at this point in time may be rather surprising to many on Wall Street. We shall see.