a healthy recovery to date

I haven’t posted in awhile since I didn’t see much difference in the internals to comment on … We certainly have had a very nice recovery so far with all indexes gaining over 10%-12% for the month of October, and much more from the bottom that happened on 10/4/2011.

Today, we officially touched a few important resistance levels in the market and have some overhead pressure that we need to get through in order for the market to continue higher, so I expect to have a down day tomorrow (and over the next few days) or if there is enough strength in the market (which would surprise me), we might just propel over these important levels.

I am sitting on the side lines at the moment (sold what little I had in the market today) as the risk to reward is just not high enough until we get over these important hurdles.

We are also quite overbought right now, which just means that most larger players will hold off purchases until we get a pullback and yes … if we have a healthy retracement as I assume we will, i will most likely use that to purchase shares and get ready for another up leg as well. In fact, we havent been this overbought until the last day of the rally on July 7th … before we had this significant decline … so I expect to have a 2%-ish decline tomorrow or certainly this week.

If/when we get over these levels (and more importantly can close over them), I will jump back in and will comfortably say at that point that this correction is over, and … that we might see new highs before the end of the year (erasing all the downside that we have experienced).  In fact, for the Nasdaq it will represent a decade level high.

My assumption is that this will happen, since I think there are a lot of people that feel they have missed the latest rocket up and really want to get back in to avoid missing further upside, and every day that the market moves up is another day that someone decides to hop on board providing further strength to the upward movement.

Also, from mid October to the end of the year is historically very bullish from a seasonal perspective, so I anticipate this will only help the market move up as larger investors position their money to take advantage of this.

For now the move is up, with what I assume will be a minor retracement coming in the next day or two, enjoy it while it lasts.  I know I will!