Im still not convinced. At midday we are up huge on the Dow, Naz, and the S&P. It sure is nice to see the breadth and the bounce, but I think this is a head fake. There is ONE thing that can get me to believe this rally. The virtuous cycle.
One of the reasons that I've decided to be a student of market psychology is that many times it feeds it's own momentum by setting up a virtuous cycle. This is the idea that if enough stocks show signs of life, if enough economic indicators show positive movement, heck even if enough best friends get together at BBQs and say "Im buying stock", that the market will follow suit regardless of technical indicators. Moves like today can either set fire to a virtuous cycle, or head fake you into oblivion.
At midday I trimmed some profits as sacrifice to the trading gods, who rewarded me and took my PF higher. Im waiting for a gap down to occur as a result of this bounce. If we don't test the lows of last week, but set up for a higher low, then Ill put some more dollars to work. Currently looking at doing some more DD (for the nice Divi and the contrarian oil play), more UVN, and perhaps even some more EL if we get a gap down.
Careful and steady....
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