In search of market directions

I'm going to borrow a lot charts from Bespoke Investment of which I regard them as one of the best source for technical analysis. Why would the market broke below its strong support despite of positive news like

(1) Confirmatin of Ben Bernanke for the second term, which most will bet that he will continue to maintain "loose monetary policy".

(2) GDP growth is coming in a lot stronger. If you at the chart, it's a V-Shape.




Perhaps some are skeptical that this trend can persist as the growth mostly was coming from inventory replenishment in a very significant way. Well, my bet is that this is going to continue to be strong as most of the people refused to add capacity more than a year based on my personal observations on the manufacturing side.

(3)Earnings beat estimate at a very high rate - more than 70-80% so far.

Since the trend has changed, the momentum players will tend to look at technical charts which are not very encouranging depending on which angle they look at it.

If one connects the lower high, it is seems that there will people thinking the uptrend has broken down. However, there could be another camp of people connecting the higher high and draw a paralel line to it and found that this is very similar to July 2009 correction, hit the lower trend chanel and going higher non stop for 6 months. Those believe in the second scenario can confirm that % of stocks above 50 MA dropped to just 35%, very close to July 2009.




Me? I would prefer to watch the tape for another few more days of February. In another words, let the market tell me what they want to do rather than second guessing what the market is going to do at uncertain juncture.