Critical Juncture

Crunch time...

One of the scenarios I mapped out in the blog has been on my mind...especially as the S&P 500 (SPX) flirts with its highs from last week. For the past week the SPX and Dow Jones Industrial Average (DJIA) have been sitting above the intermediate-term support that marked the January lows. Also, there has been a creep lower in Investors Intelligence optimism.

From a purely short-term basis, it seems that a move above the last week's highs is something to watch closely. This could fuel a pop as the bulls would scream "double bottom" and some of the recent capitulation in Investors Intelligence may reverse itself and draw some money back into stocks.

While I don't think I would consider my self a bull, I have learned to respect momentum as it can much further than what seems reasonable. A breakout seems to be what the bulls should be salivating for...

This also raises the very interesting question of what would happen if the bulls couldn't force a run here...