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Good and Bad


Before I run out to a doctor's appointment, I would like to comment on something Toddo said in his random thoughts regarding the very near-term breakout in S&P 500 that everyone is talking about. He mentioned that it could be good and bad. I agree and want to explain.

It sounds silly to say it could be both, but this is where it is essential to define your time frame. The reason it could be good is that a clear breakout (especially on a close) may allow for a rally to the upper end of the trading range I highlighted in this morning's article. It could be bad because once it gets there, the various technical indicators are likely to be in a rather overbought intermediate-term condition in the context of a clear set of lower highs. In other words, a pop to the upside could be met with a lot of trendline, and oscillator resistance as well as supply.

The breakout is clear intraday, but as many of you know, I like to go by the closing prices. It is also important to remember that one doesn't need to make an investment decision based on every tick. I believe that one way or another, the next 5% move is coming very soon. The action nearer to the close and the movement of the VIX may go a long way in determining which direction.

If I had a gun to my head, right now I would say the next 5% is up into resistance. The great news is that I don't have a gun to my head and hopefully neither do you! ;-)
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Hey Toddo, pretty funny hairbrush comment
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