It’s been said that we see what we want to see. Some of you are probably familiar with the Young Girl - Old Woman perceptual illusion where your brain alternates between seeing a beautiful young girl or an ugly old hag. The market is like this image right now and it’s critical that your focus is 20/20 without being biased by what you want to see. After the past two days of substantial upward moves in the indices, I can understand the desire to visualize the pretty market. After all, it feels much better than the reality we have been witnessing the past 5 weeks. I was actually becoming more optimistic over the past week and saw glimpses of the pretty chick myself. I was so motivated to try to get behind this rally that I decided to look over the charts to confirm what I was expecting - a significant improvement in the technicals.

One of the great things about HedgeFolios for me is that I don’t “want to see” bullish or bearish views of stocks, sectors or the market. I just focus in on what I am seeing and try to report it, not predict it. After looking at all the charts, I wasn’t impressed and I still see a lot more of the “old woman” than I had expected. Maybe tomorrow’s action will change the picture but I am very skeptical of this rally.