{+++}The market open fairly well today, then dive bombed on some Euro news (what can you believe?) about the next pending disaster. Later in the day though, there was a news report that Europe was close to a plan to save themselves. Kind of like our TARP was back in the day with something like eight times leverage. It is through this scheme that they will try and fix their issues, the jury is still out, but the market liked it. Remember, the market isn’t the economy and we were oversold, so some shorts ran for cover.
The above chart (click to enlarge) is the 10 minute chart of the SPX today. Today on our the chat room, as things were starting to act up, I mentioned that there was some resistance at the 1150-1152 level and that if the index managed to break through that level, it could tag the 1163 level. Well, it did break through (2 red arrows) and guess where it landed? Right around 1163. See the upper right of the chart, that little yellow lines happens to be 200 period resistance and that is where it stopped. That’s all fine and good, but it was a stealth rally that kind of snuck up on you. The DOW and the big caps led, while the Russell and Nasdaq lagged. It was only until later in the rally that those indices jumped in the sandbox to play with the other kids. I don’t like first day rallies after a big sell off, so I really didn’t participate. It’s the second and third days (follow through days) that validate the first move. Then I get interested. Short squeezes can be violent and magnificent in bear markets. All of the sectors that I have been writing about got bounces today. XLB, XLE, XLF, XME, XLK and others all popped. Let’s hope this can be the start of a solid rally, but so much (if not everything) depends on Europe, so we really aren’t in control at this point. We’ve all seen this movie before so be careful out there. One day day does not a trend change make. Have a great night and I’d like to extend a warm welcome to all the new subscribers.