While the indexes continue to grind higher, the Transports and the Financials are lagging. Having broken the uptrend line from the November 12 low, they merely rose to test the underside of the line today. The VIX is still hanging on, but will likely invalidate the triangle pattern, which argues against any immediate strong downside action. However, none of the indexes bested their December highs today except the NYSE Comp. The volume was surprisingly below average given the overall hoopla around the Fed's action. Nevertheless it appears the markets will be heading higher if only for a few days.
But the question that must be asked is this. What will it take to get a confirmed uptrend signal in this market? From a technical point of view anything less than a move above the November 4 high is a countertrend rally, until we get a pullback on the weekly charts with a higher low and a move above that new swing high, and we are a long way from that regardless of moving averages and momentum indicators. However, if we did see the 20 or 25dema cross up the 50dema followed by a pullback and follow-through, that would also be enough to confirm the uptrend. Still, we are a long way from that as well.
Patience is key here. I will not be adding new positions until I see a confirmation one way or another, but don't believe for a second that just because the Fed is throwing everything but the kitchen sink at this market that it can't go down, at least one more time.
One amazing thing I want to report is that I have been using the 3 week rule to trail a stop on the second half of my stock short positions, and so far I have only been stopped out of DTV. I managed to cover the first half of DTV around 18 and exited the second half for a small profit. Although I have given back some gains, I am still in my remaining stock short positions. I am now only 40% short in the portion of my account allocated to invidual stocks while I am 60% long. Hopefully, I will be able to take some profits on the long positions by the end of the year. There are a lot more sophisticated volatility based stop systems, but I don't see that the more complicated is better than the simple 3 week stop.