Green Light For A Bailout

In a stunning reversal after yesterday's seemingly end of the world news for Europe, a German court has upheld the German bailout of the rest of Europe, pleasing everyone except those who are going to have to pay for it (ultimately, I suspect, the U. S. taxpayer will get the final bill). Also stunning was the sudden reversal in the elder impulse system: today's move was so big that it went right from sell to buy with no intervening blue bars. Most stunning of all, lack of volume. Very few stocks really participated much in today's rally, it waas mostly a day of buying the most beaten up areas of the market (which smells like short covering). Whether today was enough to suck in the big buyers remains to be seen, but so far, I doubt it. It might, however, give the market th juice it needs to get to that elusive target I have been watching for so long: 1250. 

 The Nasdaq had only a slightly better day today, and with a move like today, you really would expect a lot more volume. Price relative is now essentially going flat so the Nasdaq really isn't helping us out here. If i keeps going up, it has a double whammy of resistance at 2600, because the 50dma is headed there and they could meet within a couple of days.
 

The Russell 2000 had a pretty spectacular day today, and since it has been one of the weakest parts of the market, that shouldn't be a surprise. I suspect that the shorts that covered today are going to let this go up a little more before jumping on it again.

Ticker	Relative Strength Index (14)
XLU	55.01
XLV	54.87
XLP	54.54
XLY	50.46
XLE	49.89
XLB	49.43
XLK	49.39
XLI	47.46
XLF	47.16

Here are the sectors ranked by RSI. Not much has changed, other than XLE moving from last place to the middle of the pack.

XLU is still the strongest by RSI and also had the best performance since last week. Iyt i still in a pretty well extablished range. As strong as it has been, I would have expected the price relative line to be rising: it isn't. I don;t expect a breakout here anytime soon. Oddly enough, there are only two sectors with rising price relative lines: XLV and XLY.

Despite an enorous move today, probably 90% short covering, XLF has recaptured last place and also had the worst performance for the past week. This chart sort of reminds me of a dying fish flopping around on the deck of a fishing boat.

Tring to trade this market is starting to get a little treacherous. i actually did quite well during the last rally, but may sit this one out. The news is way too fluid and frankly, the situation in Europe is going to implode at any moment (I hear Merkel is using the same "tanks in the streets" argument that Paulsen successfully used to extort money from our Congress).So I may be sitting this one out.

I will have the new highs update shortly.