I do not care who you are, today was a great day for the bulls. I could try and poo-poo the rally, but to what end?
No, to hell with it. I will poo-poo it.
 To begin with, for a day that found the Nasdaq up 3+% and over 80 points, the volume was just a little above yesterday’s and no where near the volume experienced during the sell-off. Obviously some players did not participate today. I’ll leave who they might be and why up for speculation.
Secondly, the Nasdaq has significant resistance ahead at 2700, created from both the falling 50 day average and overhead supply. Getting beyond that level anytime soon will be a shock to me. Should that occur, well then I will have been just plain wrong.
Thirdly, the gap left from today’s bull orgy is screaming to be filled. Look back over charts and see how often these types of gaps are left unfilled by indexes.
Finally, on Monday, everyone was a bear, and the sentiment was often mentioned as a reason to get long. Remember, Rome was lit ablaze? Well now everyone is a bull again, dreaming cockeyed dreams of “runs until Christmas.” Beware the sentiment.
To be true to my lazy and ignorant method of analysis, there are several bullish elements: namely the MACD and Stochastics are both looking like a powerful and lasting push up could occur.
I will jump through it.
…like a dog.
LOL.
I’d rather that TG put on some lace leotards and swing from it for a bit.
Volume on all indices sucked for that kind of rally – I’ll give you that. I believe that this is an oversold rally that will last until the downtrend line for both Dow and Naz are smacked into – which should play out until the 11th. That’s not to say that we don’t decide to scream higher after the 11th. It’s just that technical and fundamentals play out together. This extremely oversold condition is visible on just about any oscillator you could possibly plot. The correction from this oversold condition is to downsloping overhead resistence on the daily chart and it coincides with the next significant news announcement on the 11th. Another words, these are upside targets for the institutions in anticipation for the next big market mover. So, buy up until the 11th, but lighten up about 1/2 of your new positions at that time. BTW, do not expect a push up tomorrow – oh, we may get it in the morning by all the retail geeks, but we are at the 200 ema on the YM and the 34 EMA on the NQ (dow and naz e-mini futures). I fully expect a geek move in the morning to be spanked down in the middle of the day. BTW, the futures rule the markets not equities. This correction off of oversold conditions for the indices coincides with an overbought correction for the Yen and oversold correction for the dollar. The big decision will be when these oversold/overbought conditions are worked off. In the mean time (until December 11), make money shorting the yen and swissy, and going long the indices/stocks this week, although, I would be surprised to see much more upside through the end of the week.
Alvari, I think what you say is absolutely feasible.
The only thing I’m unsure about is all this talk about the 11th.
I’m not so sure that the professionals are going to try and cut the legs off of retail and dumb money long before then.
I mean, the 11th makes sense as a sort of sideways target. But, it almost makes TOO much sense. Am I making sense?
I agree. We slop higher (due to the big up moves the last two days) until the 11th and then we wait for the next signal from the Fed. No significant push down will be mounted by the beartards until the 11th, and that will only happen if the Fed bitch slaps us. I say “slop higher” because of the multiple overhead resistence lines where battles will ensue (significant MA and downsloping trends), the moves over the last 2 days, and the time needed to correct for the oversold conditions. I really do expect that we will get a couple of weak days to end the week; however, I am not trading that thesis given that we are at the end of month and lot of blood has been spilled. I daytrade futures, so I will take my cues from the intraday charts. As far as equities, I will be nibbling long Friday afternoon in anticipation of a move up through next week. It may make too much sense as you say, but I need a thesis to trade equities and that’s what I got for now.
http://tradinggoddess.blogspot.com/2007/11/two-big-up-days-and-then-what.html
A great post by Bullish Jim about what happens after 2 big up days. A must read for the Bullshitters.
reader request : airm
Take a look at the longer trend in that chart. Its still higher. Higher highs and higher lows. Lows being Feb, Aug, (now maybe). Just because its on a longer timeframe doesn’t mean its any different than the shorter up trends.
I agree Gapping.
I think though that we will not see a higher high for a while, and that we will see a lower low in the near future.
Commonly referred to as the fractality of market data.
jog on
grant
Grant, what is “commonly referred…fractality…?”
I mean, what were your referring to?
woodie,
That markets are “Fractal” in their nature [Mandlebrot]
He came up with some interesting mathematics for this.
Taleb also works with him [on occasion]
jog on
grant
Woody,
Looks like an inverted H&S on SIRI …. is there any upside there worth playing short term?
Wood: Any comments on JCG today?
Gapping, I sent you a congrats in Fly’s closing comments thread.
I’d say there is a great chance of a trend change underway.
If I weren’t bearish here, I would probably consider nibbling a bit. I still might, even though I’m cautious over all.
Anyway, hope you’ve banked some serious jingle!
Its my biggest position right now so I am happy. My only concern is the bears will try to seize on the fact that SSS was lower than last year but what do you do, they can’t grow at 17% per quarter forever and they don’t trade for a high multiple right now as it is anyway. There is a 12% short position right now so they should get squeezed some. All in all wonderful quarter with a raise.
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