Tuesday, October 28, 2008 10:33:36 PM
Is it for real this time?
October 28, 2008 by day_trader
I guess the question that many of you, including myself, have today is around whether today's burst was the kickoff of something bigger or just another short squeeze? It's been a tough couple of weeks and sentiment is in the dumpster but let me tell you why I think this market might finally have some legs under it. In my last update, I mentioned a reversal in the Dow which needed confirmation to be considered bullish. We didn't get it. The alternative was a break below the lows in the Dow at 7866 which would have started a waterfall decline in my opinion. Nothing is out of the question here but I still maintain that to be a very low probability. I think the market told us today that it was willing to support the October 10 lows. Let's take a look at the Dow and S&P500.
You can see below that the S&P came with 6 points of its October lows today and held its ground, staging a 100 point rally out of that low. It is clear that there is some substantial support there. I'm taking it one step at a time and my next resistance level is 985 to 1000 which I want to see this market close above. This would confirm that we saw a bottom and that October was the bear killer once again. This could lead us into the 1125 to 1200 region.
The Dow Jones is painting a similar picture but looks a little better than the S&P. It has hammered out a triple bottom of sorts with declining volume; however, the dow has actually broken up through its triangle formation that we have labeled on the chart. I think 10500 will pose as the next significant area of resistance. It may take a couple weeks to play out. I am seeing a year end rally in the cards here.
I also noticed a phenomenal triple bottom in Goldman Sachs (GS). If I wasn't concerned with this companies business model, I actually may have bought it.
Today's rally was induced by short covering, bargain hunting, and speculation that the Federal Reserve was going to make a 50 basis point cut tomorrow. Tomorrow will be an interesting day, will the market sell the news again or will it induce more buying pressure? We are at an interesting crossroads; a strong close tomorrow could have alot of money chasing this market. If that happens, the upside could be strong and fast and bigger than we imagined. However, if they sell the news tomorrow......
Tomorrow's close will be an important one.
Source http://www.mysmp.com/blog/is-it-real-this-time.html
October 28, 2008 by day_trader
I guess the question that many of you, including myself, have today is around whether today's burst was the kickoff of something bigger or just another short squeeze? It's been a tough couple of weeks and sentiment is in the dumpster but let me tell you why I think this market might finally have some legs under it. In my last update, I mentioned a reversal in the Dow which needed confirmation to be considered bullish. We didn't get it. The alternative was a break below the lows in the Dow at 7866 which would have started a waterfall decline in my opinion. Nothing is out of the question here but I still maintain that to be a very low probability. I think the market told us today that it was willing to support the October 10 lows. Let's take a look at the Dow and S&P500.
You can see below that the S&P came with 6 points of its October lows today and held its ground, staging a 100 point rally out of that low. It is clear that there is some substantial support there. I'm taking it one step at a time and my next resistance level is 985 to 1000 which I want to see this market close above. This would confirm that we saw a bottom and that October was the bear killer once again. This could lead us into the 1125 to 1200 region.
The Dow Jones is painting a similar picture but looks a little better than the S&P. It has hammered out a triple bottom of sorts with declining volume; however, the dow has actually broken up through its triangle formation that we have labeled on the chart. I think 10500 will pose as the next significant area of resistance. It may take a couple weeks to play out. I am seeing a year end rally in the cards here.
I also noticed a phenomenal triple bottom in Goldman Sachs (GS). If I wasn't concerned with this companies business model, I actually may have bought it.
Today's rally was induced by short covering, bargain hunting, and speculation that the Federal Reserve was going to make a 50 basis point cut tomorrow. Tomorrow will be an interesting day, will the market sell the news again or will it induce more buying pressure? We are at an interesting crossroads; a strong close tomorrow could have alot of money chasing this market. If that happens, the upside could be strong and fast and bigger than we imagined. However, if they sell the news tomorrow......
Tomorrow's close will be an important one.
Source http://www.mysmp.com/blog/is-it-real-this-time.html
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