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The market indices and some of the sector indices are nearing some pretty important points. For example, the S&P 500 is within 1% retesting the early December high and the market seems to have nothing but momentum despite no identifiable resolution to any of the main issues behind the market; geo-political, economic growth, earnings or valuation. Why?

Because this is a tape driven by psychology.

When momentum can shift this quickly it is a sure sign that there is limited conviction on either side. That means that when it goes against the crowd, it can turn on a dime due to limited conviction. A week ago, IBM breaks support and everyone is scrambling. Today, IBM is breaking out and everyone is jumping. In a tape with limited conviction and the above issues unresolved, removing emotion and watching psychology could prove to be the most rewarding. Clearly, the bulls have the momentum. In the twilight zone, sounds like a good time for some rising stop prices.
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