For the third straight day the market closed higher with gains. Volume jumped on the day in a good sign for this current market rally. Tomorrow’s job report will be somewhat important as it will give a clue to the Federal Reserve’s next move. The strong move off the lows now needs to consolidate its gains. Tomorrow’s job report may not give our market what we would consider an ideal digestion of the current gains off the February lows. Tight price action with little to no distribution would be ideal. Sit back and enjoy tomorrow’s action.
Sentiment continues to favor those who are in neutral territory. For the first time since January the allocation of active managers has increased over 50%. AAII Bulls jumped one percent to 32% while bears dropped below 30%. Neutral continues to be the dominant force in sentiment. No big surprise given the action since August 2015. Sentiment is back in limbo as we approach the end of the first quarter.
There are stocks forming right sides of their bases. What we would love to see is the market to consolidate its gains so we can see handles form on some of these bases. These V-shaped moves typically fail and at a high rate. Handles will go a long way in putting the odds in our favor.
The action over the next few days will be very telling to where we will close out the first quarter. We may see some volatility, but we really would love to see tight action with handles forming. If we are lucky enough for this market to cooperate we will have a great opportunity for gains. Stay tuned and stay with Big Wave trading!
