I'm Free! And Freedom Tastes of Reality!

Who would have thunk the market would break free with such vengeance as it did yesterday? The Bulls launched the Nasdaq to highs it hasn't seen in a long time, breaking through the long-term downtrend, and in a very big way. So now, the resistance that we've been fighting for the past weeks (2430 on the Naz) is now huge support.

Now for a word of caution before you get too giddy. This is a strong buying signal, however, that doesn't mean the market is going to shoot to the moon. Oh no! In fact, you can expect it to test that support, how else will the market know it's for real? So, before you start spending like a drunken sailor (no offense to drunken sailors), look before you leap.

As the market was rising yesterday, and I sat in stunned silence, I was trying to make sense of it. Normally on breakouts, you get volume shooting through the roof. But that wasn't so. I always preach that the key indicators for determining future directions are a confluence of price, volume, and momentum. Volume was pretty good overall, but in some corners it didn't quite jive. Look at AAPL, it rose 3%, but on 10 million fewer shares than on average. It was the same story in all corners of the market.

Weird? Well not so weird. There is one other indicator that you've probably seen if you're the parent of a child with a stubborn fixation on something. That is sentiment. The market simply said, I've had my eye on that cookie jar for so long, and every time I reach for it, you slap my hand. Well, no more Mom, those cookies are mine, and there's nothing you can do about it! So, we took the cookies. Let's hope we don't over indulge ourselves. Ever eat a whole package of cookies? Later you pay for it, in a most unpleasant way.

So, now for the technical details. On the Naz, advancers led decliners 20 to 9, and volume on those advancers relative to decliners was very good, on very good overall volume of 2.3 billion shares. In other words, Advancers tipped the scales like a one ton Bull, while the Decliners were vying for a Biggest Loser bear hug. This is confirmation of a breakout in my book. Let's hope we can maintain it.