If you believe in the power of patterns, you shouldn't be surprised that this market continued to bounce back on light volume after very ugly selling Tuesday. If you believe in the power of logic, you have to be shaking your head at how the market can rally on something as anticipated as a Greek bond deal. All the worries about slowing growth in Europe and China were forgotten as Greece was the only thing that seemed to matter today.
Something is going on under the surface of this market that pushes it to move contrary to the conventional wisdom. Situations that you think would produce a sell-the-news reaction turn into catalysts for more buying. Extended markets become more extended, and when sentiment is too bullish, it becomes even more positive and creates more buying.
Many folks can't bring themselves to embrace this action, but the way to deal with it is not to fight it. Someone on my blog asked who is buying this? I don't know, but whoever it is, they're in control and there's no money to be made arguing with them.
Don't forget we have a very important monthly jobs report Friday morning. Today's run-up makes us more vulnerable to a pullback on the news, but perhaps it just creates a situation where the conventional wisdom can be exploited again when the numbers hit.
I have no edge in trying to predict how the market will react to jobs news, so I'm not going to carry much inventory. I'll be looking to play the reaction to the news rather than guessing what that reaction might be. Given this market's recent behavior, I suspect that the reaction we see might not be what many folks expect, and there will be a good opportunity to play some intraday swings.
Have a good evening. I'll see you tomorrow.
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