Stock Prices: MOPE vs Reality

The pull of the lower magnets, gap support, has increased as Friday's reversal broke the up trend lines not only for momentum (MOVB) but also cumulative force (REV). This implies that the bears will be organizing their ranks for an assault on price. If price fills the lower gap(s) on shrinking volume, it will create bullish setup(s) that will disorganize the bears.

While the market has been pushing higher for weeks on light volume, a sign of underlying weakness, it does not necessarily imply an impending break. Devaluation, as discussed in my S&P 500 will finish 2010 commentary, remains the key to the illusion of management of perception economics (MOPE). While higher stock prices do not always suggest improving economic conditions, the general perception (assumption), a point not forgotten by MOPE, is that they do.

As Alonzo said in Training Day 2001

It's not what you know, it's what you can prove.

Knowing what's going on is easy. Proving it to others is not. In essence, MOPE "works" because it stands on a very large soap box relative to that of knowledge.

NYSE Composite Average ETF with Exchange Volume: