"You've got to guard against speaking more clearly than you think." -Howard Baker
I have a semi-conscious hunch (to which some would say "What's new?) that the current move up is what is technically known as a "make-out fake-out, break-out" (Mr. Market falsely professes his love, thinking that by this stratagem he can get deeper into your wallet, with the aim of crushing the budding hope of 130/30 hedgies). It seems The Financial Ninja might agree:
The S&P 500 has finally strung together two consecutive up days in the month of October. Volume has rapidly declined as prices approached resistance round the 985 area and the declining 20 day EMA (blue line).
Ultimately a bounce to resistance around the 1050 – 1070 area is possible.
The Nasdaq Composite has put in five straight up days on rapidly decreasing volume. Futures are up pre-market, so that could result in the sixth day. Prices are at resistance around 1782 and the declining 20 day EMA (blue line).
Ultimately a bounce to resistance around 1900 is possible where the declining 50 day EMA (red line) should come into play as well.
An Obama win might be the catalyst as the world feels a brief, naive rush of relief, change and hope.
I think the economic data; especially the borrowing needs of the treasury on Wednesday and Non-Farm Payrolls on Friday will bring those hopes crashing back to earth.
I will be using this opportunity to get rid of my last longs from the panic days earlier in the month....MORE