Unbelievable what the market uses as reason to bounce. Lets face it, heading into the open the markets were up already over 2-3%, and even though it gave back all of those gains rather quickly at the open, news of President-Elect Obama’s pick for the Treasury gave the market with enough momentum to rally 6%.
But let’s be really honest…does Obama’s pick of Tim Geithner as Treasury Secretary, really get the markets that excited? No. This was just an instance of where the market was so desperate for a non-negative news piece, that Obama could have probalby appointed the family dog as the Treasury Secretary and the markets would have been fine with it. It was more of a rally due to the fact he actually appointed some one rather than who he actually appointed.
That’s why this rally sets up as a very favorable shorting opportunity. But remember, Thanksgiving has traditionally been a good week for the bulls – except for last year in which it saw about a 3% loss headinging into Turkey Day. Nonetheless, with all the selling that has taken place of late, next week could be a week for which the market works off some of those oversold conditions.
Here’s the Nasdaq and S&P charts…