I want to take a step back and analyze the “feel” of the market here.
Remember, it’s not just about charts on a screen. It’s the attempt to discern the motivations of other market participants.
And one of the best ways to do this is to put yourself in a trader’s shoes… or to consider what you personally are feeling right now.
That’s right, tap into your lizard brain and use that to observe the overall emotions in this market.
As it stands right now I think we went from “anxiety” around the market to a “screw it i gotta buy something” phase.
This coincided with the fact that the Fed didn’t do anything stupid during the FOMC announcement, and we ripped higher into March options expiration.
And yet… even if you do want to buy something, you’re probably pulling up a chart and looking at the market. You see the “resistance” coming into play as we head into 2100 and even though you want to buy you can’t accept these prices.
This kind of “mindset” holds true mainly for the Johnny Retail kind of trader.
On the institutional side it’s a little different.
They are currently in a “I don’t have any choice but to buy” mindset.
Because hedge funds and money managers have underperformed the market for 2 years now. They can’t afford a third.
That’s why I think some of the beaten down areas easily see rotation. And you see these quick moves with some decent volume as money managers try to chase performance.
That’s my current pulse on the market. I think we trade lower but it’s going to be really, really tough for this sentiment to shift from fear of missing out on higher prices to fear of downside prices.