Today's price action was constructive on the QQQ and SPY. IWM is lagging a bit, but I am starting to like what I see. We seem to be chiseling away at the previous high made back in October, slowly making healthy advances toward that level.
Although I am still holding shorts and in fact bought some near the close today, it seems like we are moving away from a neutral status and more toward a bullish status. The next few days will be critical towards this decision, but if things proceed in the manner they did over the past few days, I think we might see a nice month ahead of us.
I will say today (after the close and looking at my analysis) was the first day in a long time where I was a bit perplexed as to what to do. Most signs point to the market going up, yet volume is at an abysmal level implying there isnt a lot of conviction to the move. With that said, we keep making short term higher highs and higher lows, getting closer and closer to the previous high, not faltering a long the way.
It is also nice to see the Financials and Technology leading the charge of this rally ... which is something that is critical for a healthy sustained bull run to occur.
On the SPX and QQQ we have regained the 200 day moving average and have been sitting above it for three days now, which is very telling. We will need to go down and test this level again to see how strong the market is before going higher, so if this market is going to move up, I expect one last "kiss goodbye" to the 200 MA, and most likely a fall through it for a day or two to again ... test the conviction of the bulls.
For now, I hold my shorts next to my longs, but am questioning whether the short hold is a good thing. Time will tell.