Bad News Bears... Is it time for the rally caps?

2012 has been sounding a lot like 2008- everything was just fine and dandy at Lehman and Bear Stearns until it wasn't and everything has been just fine and dandy in Spain and Italy until... Of course Spain believes it's doing fine and dandy because they just received billions of Euros and advanced to the quarter finals which makes me wonder if Italy is going to seek financing sometime before Monday's match against Ireland to secure their bid as well.

Regardless of the parallels of this act of Theater of the Absurd one thing I've come to understand with greater clarity is it really doesn't matter what I think and pontificate about world affairs when it comes to my trading because it simply doesn't translate well at all. More and more I've begun to stick to my guns and adhere to the clues that I can read from the market data and trust more in my breadth models and how it fits into my trading plan than trying to figure out how mutual indebtedness swaps could convince anyone of their soundness.

There's a distinct schism between my interpretation of macro events on a socio-economic and political level and a market level resulting in my instilling my beliefs upon the market and not allowing the purer market data to change my opinion. How I interpret and how markets react to news is often disjointed and more often than not clouds my judgement and inhibits me from seeing the subtle clues and shifts in perception. Further, even if I do recognize them, there often follows dissonance between the information and how I will act upon it resulting in a lag time.

There were a couple of clues over the past few trading sessions that when stripped of the noise of world events and placed in context with content suggest that the beginning stages of a rally have started. The 2.4% move on 06/06 could easily have been dismissed as simply a strong bounce in a correction and the chop thereafter did little to dissuade this assessment, however in conjunction with today's 1.29% move and very strong close at the highs,  evidence for a more bullish market orientation is mounting.

NASDAQ 06/15/12

Looking at the SPX using GMMA, the short term averages have begun a rally and are very close to having a complete cross over and the longer term averages have all up ticked sans the 60.  This bounce has legs unlike the previous bounce which saw these shorter term moving averages quickly realign to the downside.

SP GMMA

The indexes have held their pivot low for 9 sessions now and some have currently eclipsed their 05/30 pivot establishing a new lower high. If there is going to be a new uptrend these are the steps that must be taken.  The upcoming week will has some significant macro events occurring besides the Greeks playing the Russians at the Euro Cup, so how we'll just have to wait and see how this cycle effects the fledgling rally.  Thus far bad news has dented the market 10%, a significant correction but not extraordinary, and if the upcoming news is pessimistic yet the market barely bends be prepared for a strong rally.