Some days it doesn’t pay to be a local, most days it does.

Paper buyers came in aggressively out of the gate and locals sold. Locals were stuck and they did everything they could to push the market lower. Then at 10:30 ET the big gun stepped in to the ring, Joey B. As I have said it is great when he is on a mission because if he gets his way he can move the market to the point that if enough sellers step in the longer time frame traders will start selling too. If he cant get his way then you know there is some good up side potential. I am always watching closely when he is on a mission.

Today, Joey’s mission failed and that was bad news for the locals that were short and continued to get short off the open. The market was so strong that these guys (and gal) couldn’t even push down to near the OR much less the top. They held those short 10 handles before puking and reversing.

The market topped out at 1169.0 with a push high on a size buyer. Locals flattened up but were not heavy short. It was one local who started aggressively pushing lower around 1167. He simply recognized the top and got short so I don’t see that it was a false move like Joey often does. Joey will fight the trend and when he is done, if the market doesn’t accept the level as value, the market will sometimes snap back in like a rubber band. This local just saw a change in trend and got on board. Locals stayed short until 1152. I wish I covered there too.

I’m not sure what to make of things here. I was expecting a pull back off the months of a steady creeping market then off to new highs into June - August but last Thursday was a little bit more than a pull back. Is “Sell in May and go away” in gear this year?

I think the break last week scared a lot of investors. Moms and Pops who still have 2008 fresh in their minds and want to preserve whatever is left in their retirement accounts may be calling up their mutual funds and moving out of equities.

I ask - has the Continuity of Thought changed?

My Value Area moving average was at 66.75 today. The market didn’t hold it so overall it is still bearish. Although we did close above the OR we could not settle above the Value area high of 56.75 or the IB high of 54.50. If we open below 44.25 tomorrow I will look for continued selling and it might just get very very interesting…cant wait!

Tim Mack