Blow Off Parabolic Move Coming?.......Bears Choke Again...

It's not out of the question and certainly not a guarantee. The bears made the move they needed to yesterday when they were able to take the S&P 500 and Nasdaq 100 below their 20-exponential moving average on a closing basis. All they needed was a follow-through today, but as usual, that was not meant to be. A gap up that ran up all day, and the game was over for the bears. Many stocks putting in outside bullish sticks, while we also witnessed the S&P 500 and Nasdaq to close well back above those lost 20's. A total choke by the bears and that's just the way it is. Yesterday gave many a good reason to go cash, if not short, but the market bulls would not cooperate. More on that later on in this note.

Once the bears tried a few times today to get the S&P 500 and Nasdaq back below those 20's, but failed, they gave up allowing the market to stay above for the majority of the day, including the closing prints. If you're a bear you can't be happy about allowing such an important reversal after finally getting done what you hadn't been able to in months. It seemed a slam dunk that today would be the day we'd fall further, and finally test those 50-day exponential moving averages, but it wasn't meant to be. In the end, before this is all over for the bulls, the market may need to explode out in wild fashion, acting as if it can never fall again before it finally tops out. Like I said, nowhere near a guarantee on that, but it is beginning to act as if it simply needs a blow-off top in the near future. A very nice day for the bulls heading in to the weekend. Nothing bearish yet.

Why would a blow-off top occur or at least, why hasn't the market fallen yet is what the market players are trying to understand. We know the answer as it has been the answer for far too long. Rates are simply too low for the average American to consider going anywhere, but the stock market, so money keeps pouring in and more importantly, money is not flying out. It moves around quite a bit, but it surely isn't leaving the market. This was the plan of ex-Fed Bernanke and it worked.

He passed the baton on to Fed Yellen, and she has carried the torch proudly as she loves that this market keeps trying higher. She is getting a bit nervous as she tried to cool off the market machine some days back by calling parts of the market frothy. Even her words of caution couldn't stop the low-rate bull market run. So yes, we have a massive sell signal on froth and greed with eight-plus weeks and running of over 40% on the spread between bulls and bears. The market simply doesn't care as folks won't budge for now as long as rates are remaining at historic lows, and, thus, offering no other avenues of investing for the average American. It is what it is.

As always, take the emotion out of the game and see price for what it is. Yesterday it was seemingly bearish, but today it is anything but. We know that there's no reason to even think of shorting until we lose the 50-day exponential moving averages, and then fail on a back test on all the key-index daily charts. A failure, meaning a test and a long tail on volume back down. Then it's safer to attempt to short, but why try to short here unless you like whipsaw and probable financial pain! Let price be your guide. Keep it as emotionless as humanly possible if you're a bear by respecting the law of the 50-day test. Until it disappears and fails on a back test, you're wasting energy getting emotional with the whys of it all. For now, things remain bullish, whether it makes sense to you or not. Don't fight an unnecessary battle with what you're seeing.