A Potent Cocktail

So those put buyers got their surprise, but they may get the last laugh sooner rather than later.

Not only did the market break out yesterday, but it was accompanied by a potent cocktail of capitulation and chest pumping.

I heard savvy traders back off their previous jaundiced views of the market.

CNBC kicked off Fast Money posing the question, ALL-CLEAR SIGN?

A noted bear on the show caved in and said Yes.

Steve Liesman, fresh from his epic comment "Debt is the great bridge between working hard and playing hard in this country" chimed in with "ABSENCE OF HEADWINDS."

Then there was Gartman's  "anyone who continues to be bearish, you gotta problem."

Howard Lutnick from Cantor Fitzgerald who recently bought a 14,00 square foot, $22 million condo in Florida stated "We're at the beginning of a five-year bull market."

And finally I saw a taunt from a former broker: "Anymore top callers want to try their luck? Step right up, grab the mallet."

There may very well have been many people calling a top. Calling a top is rather futile. But there are topping patterns, and there are certain tells that suggest when the conditions for a top exist. This is the camp that I'm in currently. And I've been in the camp on and off for a few years now. In fact, I've held my own jaundiced view of the market ever since the Fed openly began targeting asset prices.

Regardless, here is the pattern that I'm viewing on the weekly chart.

In other words, wave "3" of the wedge below could be close to conclusion (the target zone is currently 1950.41-1951.06). If there is no corrective action for wave "4" and price instead shoots beyond the 1950s, that's ok. It will then be time to identify another pattern. But for now, price & sentiment fit well with the current interpretation.