The definition of a pullback, according to Investopedia, is “a falling back of a price from its peak. This type of price movement might be seen as a brief reversal of the prevailing upward trend, signaling a slight pause in upward momentum.” Well, the last 3 weeks on SPY certainly fit that description (although the key words “brief” and “slight pause” are highly left up to interpretation). If it’s just a pullback, why then are so many folks so bearish? The overabundance of information out there often feeds on itself and causes traders to start believing in the way life should be, instead of seeing it for what it actually is. Our Heat Gauge last week helped us to see the pullback as a buying opportunity, and 2 high volume sessions (last Friday and Monday) are telling us that big institutions are on board as well. How much longer and higher can we go? When the big boys are holding the ball, the bounce is likely to go… well, longer and higher than most are inclined to believe. -MD
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