Major indexes all up big; volatility indexes all down big. This is the first time we’ve seen two consecutive up days in a row on the S&P 500 since Oct 22 and 23. Yesterday was a gain of about 20 points, and today double that at 40 points, for a total of 60 points and a gain of 4.3% in two days. So if Monday’s closing at 1407 holds — almost exactly 10% off the 1565 closing high of 10/08; but possibly too "pat" — I’d still expect to see the 1440-1450 range revisited, at a minimum, before resuming the march to new highs.
People say that markets take the stairs up and the elevator (or window) down, but I can tell you also that the pace at which a market can "melt up" can be surprising, always counterintuitive, puzzling, frustrating. It’s really the hardest thing to trade, short term; because you just can never fully believe in it. Whereas, it’s easy to believe in a meltdown.
If I was going to take the bear side, now, which I’m not, it would be a good time to short (sell into strength, buy on weakness), but with a tight stop. It will be very good for retail business, particularly in the face of a melting R/E market, if The Street can put in a reasonably profitable year of at least 8%, which means 1530 on the S&P by the time Santa comes along. That’s another 60 points to go and it will be challenging enough holding onto the 60 already gained in the last two days.
Update: Here’s what Carl has to say, and this after thinking he could get in long at about 1390 sometime this week. This is part of what makes Carl Futia worth listening to. He’s honest. The second he sees he’s wrong, he dumps his plan; and he never bothers making excuses.