What next for the S&P?

Here is the weekly chart, and you can see that the commercials have jumped back heavily to the long side of the market. This is bullish when we are already in such a strong uptrend, just the smallest dip and they bought back in heavily.

The bond market decline is reflected in my Magic Potion indicator at the bottom, but it has abated somewhat in the last week. There are certainly alot of news items that are making intraday swings interesting lately, but overall as you can see, we really have not had much of a retracement.

It would be nice if for a change, positive news got some media coverage. Why is it always the negative stories that get the most attention? Should anyone really be shocked that a few mortgage related funds have some trouble? You would have to be sleeping in a cave not to be aware of the issues in Real Estate right now! This is why that story only hurt the market for about 2 hours, but it still killed the party.

I expect us to move sideways with an upward bias for the next month or two at which point I will be looking for any signals that the party is over. If all the pullback we get is what we have had so far, another good sized up leg could be coming. As always, I will follow my rules as far as when to exit my longs, these are just opinions based on what I am observing.