After yesterday's big disappointment, it shouldn't be surprising that the bulls were a little more cautious at the opening this morning, but they kept up the buying pressure right up to the close, and the market finished with a pretty staggering gain. Volume was higher than yesterday, so today is a possible follow through day (which IBD won't confirm for a fw hours, so I;m not even going to attempt to make that call). We seem to have established a new support level around 1120, and now appear to be ready for some upside testing, the descending 20dma being the first point. The MACD histogram peaked out yesterday, so we may be in for a pretty decent bounce here.
Crude oil is getting a stronger bounce than the market is, but whether that is due to optimism or just a lot of shorts covering is not known 9I suspect the latter). This has a gap to fill, but I would not bet on it going higher than that.
Gold had it's first down day in, what, two weeks or so, and everyone is screaming "top" now. It might be, but I would not bet on that, either. It's funny how those two bottom pivot points nailed the top one.
I would have expected a better bounce in the ten year yield if this is the beginning of a long rally, but so far it appears to be encountering stiff resistance as no one here seems to be in a hurry to get out and back into stocks. I wonder why.
The market, and the dollar, seem to be anticipating Bernanke's latest "revolutionary" (read "unconstitutional") move to save the markets. I have no idea what that will be, but clearly the market is expecting another dollar thrashing. If they don't get it, this might finally start moving up.
The market had a good move today, and got decent volume, but I wasn;t impressed on a number of counts: the number of new highs was pretty pathetic, and there were no real industry leaders. On the plus side, the leading stocks I am tracking did well, and we did have one big breakout. I suspect we will get more from here, but am still skeptical about a major trend change here. BAC is clearly in trouble, and all the assurances that it is not sound an awful lot like the assurances we got about Bear Stearns and Lehman.
I will have the new highs update shortly
2 comments:
Hi,
I know that IBD has already called today a FTD and changed their market outlook to "Confirmed Bull Trend". However, whats your opinion on the fact that this FTD occurred on the 11th day of the rally since August 9th?
Hi YYBC
11 days is a little long for a follow through day, but i have seen them come that late and still be successful before. My main question was if the big drop we had last week put the market back in a correction (technically no because we did not undercut the low, but I did not like the high volume). I am a little skeptical of this follow through day, and if you watch the IBD market wrap video from last night you will see IBD is a little skeptical too. But, I have learned the hard way not to argue with IBD.
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