Today's rally really caught me off guard and truly has me confounded. As I posted earlier in the day, the durable goods report that was released before the bell, which acted as the catalyst for today's move higher, wasn't exactly the rosy data point that the price action implied. This was, in my opinion, simply a case of the market wanting to rally in spite of the data. For someone who is currently holding a short position, this has me concerned that things could move higher for a while longer and bump up against the 1,174 level. I'll post a more in-depth technical summary tomorrow. But it's a market that is willing to move independently of fundamentals that can do the most damage to a trader if they are on the wrong side of the momentum. As such, I'll be minding my risk controls as diligently as ever. Thankfully, the S&P 500 has a ways to go before I run the risk of getting stopped out.
For now, I'll end this short post by restating my conviction that the equity market is ripe for a move lower. The soft economic fundamentals, the record rally during the month of September, and the continued need for monetary and fiscal stimulus in the U.S. economy are still threats overhanging the marketplace. Sooner or later investors will recognize these issues and break from the bullish euphoria that played out during today's session. When this reversal will occur, as always, is hard to predict, but I would be extremely nervous in a long position right now. Even more so than I am in my current short.
Until tomorrow.....
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