Equity Market Comment - 2/13/2008

Three days in a row of higher highs, higher lows and higher closes.
With the way equities have behaved this year, this type of market action seems almost magical.
So far things have gone pretty much the way we had anticipated and the Nasdaq is living up to its potential also.

Things seem to come in threes with the markets, so it would not be unexpected to see some type of breather tomorrow before we continue to move higher.


The probability/seasonality model for tomorrow pans out like this:
1. Monthly seasonality shows a 65% chance of decline with the 2nd largest average decline for the month. This is a Negative.

2. Options Expiration Week brings tomorrow in at a 58% chance of closing higher and the second largest average gain for the week. This is Bullish.

3. Pre-Presidents Day shows a 54% chance of decline tomorrow.
Which is a Neutral Reading.

4. Day of the Week seasonality brings in a 55% chance of the market moving higher. Another Non Event which is Neutral.

5. Lastly the day of the year statistics show tomorrow being an up day 53% of the time.
A non event and a Neutral Reading.

Not much to hang your hat on there, with 3 neutral readings and 1 bullish 1 bearish.
However, the bearish side takes this contest simply because it has a 65% chance and the bullish has only a 58% chance.

The short term charts are showing some exhaustion here, but the capability to move 10-15 points higher before taking a rest.

Short term traders can look to take profits on strength tomorrow as a pull-back of sorts seems to be in the cards. It should be a very brief pull-back, perhaps only 1 day and then we should continue higher.

Keep an eye on this wedge off the lows on the 15 minute chart as it should give a strong indication of short term direction for those traders in this time frame.

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IN A NUT SHELL, WE REMAIN IN A BULLISH MODE OF BUYING WEAKNESS, BUT WE EXPECT SOME TYPE OF MINOR RETREAT ON THE WAY. NOTHING TO WORRY ABOUT, BUT SHORT TERM TRADERS SHOULD TAKE SOME PRETTY NICE PROFITS.