Post Labor Day Performance

The post labor day performance is not quite as postie as I thought. From the daily chart, it looks that the 30-day moving average can still hold. This is a positive sign, and it shows that the next target is to break SP500's prior high (late Mar) of 1,420. In order for that break out to happen, investors are waiting for more positive news, like Thursday's European central bank meeting, Friday's non-farm payroll report, and next week's FOMC meeting. Many people are still anticipating the QE3 will be released. If it could, the market will very likely to break out 1,420 and head up toward 1,520. Even though the current investor sentiment is fairly bullish, but it doesn't mean that it's the time to turn around and start a correction wave. It could be more bullish depends on how much the good news can stimulate the market.


What if the news disappoint market's expectation?

If you look at the weekly chart, it shows a different picture of the market. We could be currently sitting at the second peak of the double top trend. If the Fed let investors down by not giving any clear direction of future QE3 release, the market could turn around and start a sizable down wave given both the stochastic and investor sentiment now are high enough for a correction. I am now cautiously optimistic about the market's future performance. If the market is not going up after FOMC's meeting next week, I will liquidate majority part of my long positions and increase some short positions.