Reversion to Nice

[youtube:http://www.youtube.com/watch?v=G6HbuUzsBWE 450 300]r

H/t @RaginCajun for the great collaboration on the video.
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MARKET WRAP UP 08/27/10

After the second test of 1039 in three days, the S&P 500 staged a stunning about-face to sprint higher into the end of the week. With the S&P closing up 1.66% to 1064, it is clear that the market was too oversold and had too much bearish sentiment over the past few days. With the rubber band being stretched too far in one direction, we were either going to snap back violently in the other direction, or break in the form of a crash. Betting on crashes is almost always a losing bet. More often than not, the market will revert to the mean. However, with 2008 and early 2009, not to mention the flash crash, still fresh in the minds of many traders, it is understandable why many thought we were on the cusp of another washout after yesterday’s dismal performance.

I will leave you on this late summer Friday with some improved daily charts of the major indices and sectors. The common theme is that significant support levels have held, and today’s strength gives the bulls back the baton in the short term. With more than a full week until Labor Day, the bears would have to be awfully ambitious to aggressively short for the remainder of the dog days of summer.

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EDIT: $EEM Chart too:

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