The Market Trend Model (data sheet) remains with a mixed bias as the Russell 2000 continues to lead after the market indexes tested the lower levels of the current range during yesterday's trading session. As has been the case for many months now, sellers just evaporate at levels where the market seems destined to fall into a dark abyss.
As I stated in last weekend's market observations, "Stock market bears and others who clamor for a '10%' correction overlook the market's ability to 'correct' in time rather than in price. In my view the market uptrend remains intact as the last six weeks appear to show a market in consolidation before making its next move up."
The Nasdaq (chart) and the Nasdaq-100 (chart) continue to remain strong and are following the lead of the Russell 2000 (chart). Meanwhile, the S&P 500 (chart) looks like it wants to rally from oversold levels.
I would think anyone starting this week "short" is in an uncomfortable way if today's big rally with expanding volume did not cause them to reconsider the market's direction. Should today's price action be the start of more prolonged uptrend I would expect the current price levels to remain firm as shorts scramble for the exits and buyers begin to fear missing the move.
While anything can happen in the stock market from one day to the next, today's price and volume action appear promising. Should today's price gains remain firm through the end of the week, I would expect to see higher stock market prices on the horizon.
"There's a time for playing it safe and a time for risky business."