Closing at the highs stocks erase Wednesday’s loss

There were many market top callers coming out of the wood work after Wednesday’s market. Sure, it didn’t look good at all. On top of it all AAPL appeared to put in a topping candle with huge volume. Buyers stepped up in a big way supporting the market, but the downside was the lack of volume. Let’s not forget this is option expiry week and volatile moves do occur. Regardless, today’s move was an outside reversal day a very bullish indication for stocks.

AAII sentiment survey was released showing the number of bulls dropping to just above the 40% level while bears jumping almost to 30%. Perhaps this is a positive sign for the market with doubt creeping into the minds of traders. More importantly we just want to be on the proper side of the trend and we continue to be in an uptrend. Until we are shown otherwise by the market, we’ll continue to plug along.

All uptrends suffer slight pull backs of 3-5% and on occasion 8-10%. So even if we were to see a pullback it would not come as a big surprise to us. The market still is in overbought territory, but as always with “conditions” they can last a very long time. I suspect we’ll continue to see the market fool many of its participants into thinking one way or another. For now, we’ll stick with our rules and discipline and leave the guessing to others.

Tomorrow’s option expiry will certainly usher in a ton of volume. We’ll see if it is enough to really skew the view on the day. It is awfully difficult to derive much meaning from volume on options expiry and it simply isn’t worth the time trying. Stick to your plan!

Have a great long weekend. Make sure you get out and enjoy life outside of trading. There is nothing more than balance in your life. Enjoy it and as always cut your dang losses.