Market Analysis Feb 7 2010 SP 500 Emini ES

 One of the things I love the most about the markets and trading is the repetition.  When I see the same patterns develop over and over again and recognize these patterns as the very same ones that have delivered profits in the past, I cant help but get excited about the profits to come.

 While some may feel bored by this, it is precisely this phenomenon that allows us to profit from the markets.

 Humans are creatures of habit, doing the same thing over and over, making the same mistakes over and over…. creating the same chart patterns over and over.

Below is one of my favorite that I have shared with you before..

 A situation, that if you were in our chat room in the last week you heard me caution you about the “retail rally” the “Johnny Come Lately”

 In short, a market cannot sustain new highs without broad market participation. The “Tardy to the Party” retail investor has been buying the highs since the beginning of time.. this time is no different

 The SP’s have been diverging on every new high since last August.

The  launch to 1,000 left us an untested relative low at around 980

The ADV-DECL reached its highs of approx. 2400 on that summer rally, but we have not been able retest the ADV-DECL highs on any of the subsequent highs…  There has been less and less participation on each new high! Guess who got is last…..

see my chart