After gapping up in the overbought area, yesterday’s trading brought the NASDAQ and the S&P 500 back down below the open of the gap up. This is usually a strong sell indicator. The Harami in the Dow indicated the likely pullback on weakness today, back to test the 200 day moving average. Short positions are working better.

Today’s consolidation in the market indexes do not show any major change of investor sentiment. The indexes continue to trade above the T line as well as the 3T line. The indexes are in the overbought condition but still in an uptrend. Keep safety stops in place.

Be careful, although the market indexes are trading positive, they have gapped up in the overbought condition. It would not be unusual to see the Dow, after gapping up above the 200 day moving average, come back and test it.

Continued consolidation even though the Dow is trading higher, the NASDAQ is trading slightly lower. There are numerous uptrending stocks showing profit-taking today. These market conditions are still producing good Long’s and good shorts.

The market indexes are still illustrating very indecisive investment sentiment. Due to a glitch in the scanning software last night there was not any pics. However, today’s trading would not have provided any good confirmation.

Although the market indexes are above the T line, the nature of the market is still relatively indecisive. This makes the individual stock chart analysis the top priority. The T line remains the ultimate trend factor.

Today’s positive trading indicated the 50 day moving average was not going to act as resistance for the NASDAQ, the 200 day moving average is not acting as resistance for the S&P 500. The current uptrend continues provided the indexes do not come back down through today’s open. Keep safety stops in place. The market is in an environment that can drastically change based upon international of events.

Today’s consolidation is not unexpected. Remember when a price moves through a resistance level, as seen in the Dow at the 50 day moving average, it is not unusual to come back and test to see if that resistance level is now going to act as support. Stay long, watch to see how the Dow reacts at the 50 day moving average.

After the initial profit-taking this morning, the bullish sentiment continued. The longer the indexes remain above the T line, the more confidence will be building back up in bullish sentiment. Long positions can be added, any short positions remaining should have very compelling bearish chart patterns. Unless there is a dramatic event that reverses investor sentiment, which with these world events, that can be likely, anticipate bullish sentiment is prevailing.

The Dow forming a MorningStar signal yesterday with a close above the T line provided the prospects that a bullish reversal could be ready to start, based upon how the markets opened this morning. Obviously, the bulls are taking back control. The S&P 500 and the NASDAQ also trading back up above the T line. This is bullish confirmation, however watch to see if the Fed meeting provides any surprises.