rally running out of steam??

very little action has happened since one week ago, we are certainly consolidating as prices is getting tighter and tighter.  What that means from a psychology point of view is that

1) there seems to be an agreement on what is the correct value of the market at this moment, both bulls and bears are not fighting too much.

2) people are taking a wait and see approach and will follow the herd whichever direction it goes.

There certainly is indecision.



One thing is certain, the action seems to be leaning toward a bullish stance in that we are sitting above the 200 day moving average (SPY) for over a week now and have yet to retest that level.  So, the masses seem comfortable with price above that.

The problem is that volume is abysmally low.  In fact today was one of the lowest volume days of the entire year, lower than late December when most investors are on vacation.  This leads me to believe that there is little conviction is the bullish case and that most traders being uncertain as to the future direction are sitting on the sidelines.

Usually when we see this coiling action at such important support and resistance levels we get a very big move on a breakout.  Being so close to previous highs and sitting above moving averages, implies a bullish move, but if the bulls take take advantage of this soon, the bears will start getting aggressive.

so, at the moment it is really anyone's game, although I am leaning more toward a bullish move, I am positioned on both sides (long and short), and am lightening my positions until a clear direction is evident.

I will say, that I am getting excited because I think this movement will be any day, and should be quite aggressive which ever way it goes.