If the sp500 today or the DJIA manages to close above that gravestone doji (or shooting star candlestick) that formed a couple days ago then I have to conclude that the bullish trend continues and it is more of the same.
I can come up with a lot of reasons why the market should top out right here and right now, but if we do not get a hard reversal today into the close then I can only assume we are heading higher.
After looking at the NYSE composite index it occurred to me that there are two interpretations of the last few months price action. It can be a double top, or it can be a head and shoulders bottom. The scary thing about the head and shoulders bottom theory is that if true, it measures to a minimum 8200-8300 on that index.
The recent 5 or 6 day shelf that exists in the NYSE is about the same number of days that existed in the previous sideways shelf. So you have symmetry there in terms of time. It would seem odd to have a head and shoulders bottom formation form right near what appears to be a major market high, but I am at least open to the possibility.
The problem I am having with the double top theory is that I would have preferred to see a more immediate downside reaction after hitting the previous top to make the double top more conclusive. The fact that the NYSE has stalled up here right near where the previous highs are WITHOUT giving much price ground back tells me that the market is absorbing the sellers who existed at the previous highs (mid January time frame).
The situation that sometimes exists is that you can have a market keep advancing on fewer and fewer issues until only a small batch of stocks are actually pushing the market up. So what this does is make it appear that the trend is bullish when actually a good portion of stocks are declining and breaking down. This type of dynamic can last for YEARS. I am not saying it will, but I am saying that it is something to be aware of.
So again, if we close above the recent reversal candlesticks, then the bull trend continues. But if we rally today and then close down very hard or negative then at least the bear case is still somewhat alive.
LVS (Las Vegas Sands Corp) is still looking pretty strong to me and is a good long candidate assuming the bullish scenario is the one that plays out. In fact I will very likely go long LVS sometime today to get on that bull train. It is a solid chart and I think it can get a continuation going regardless what the market does. If the market does fall apart sometime this week, well then that is what protective stops are for. But I like the LVS chart and THIS TIME I do not want my fears about a market top or bottom to distract me from the power of a nice chart. The only bad thing I have to say about Las Vegas Sands Corp is that the large price breakout we had about a week ago was only on 74 million shares which is close to 50% less than the swing high volume in mid September 2009. That is a concern, but the huge sign of strength price move is what is keeping my still constructive on the chart.
I may dump the TZA very early today to stand aside rather than take the 5% loss if it falls back to new 52 week lows. It will be a tough call, but at some point today I think we will have a more definitive answer.