Market Analysis: Build on Today’s Rally

I really like the action that we got out of the market today. Strong volume along with decisive price action. However this is rally is hard to get behind with what we have seen of late from recent rallies. Namely last Wednesday’s rally and the one from the week prior, where the following day, the bears managed to wipe out all of the gains and then some.

If I have to place a bet on the market tomorrow (no stocks in the portfolio right now so I really have no bias here), I am guessing that we won’t see the same type of action where we erase all of today’s gains. What we may see though, is an aggressive attempt from the bears to sell this rally and try to use today’s gains as simply an opportunity to reload their short positions. But it is imperative for the bulls to hold most of today’s gains (as in about 80% at least) or to build upon them. Anything else will swing the favor back into the bear’s corner.

Remember greed and fear drive the markets in the short-term. Obviously the market is consumed by the latter, and will continue to do so, until the bulls can break the trend, put together a string of rallies, and eventually establish a trend of ‘higher-highs’ and higher-lows’. Until then sentiment will not change.

A note to our subscribers: This market has not been at all conduscive to swing-trading whatsoever. In hindsight we could have perhaps been more aggressive with our short selling, but to be quite frankly, even to the downside, the action has been somewhat erratic and unpredictable which is why we have avoided any aggressive short strategies over the past few weeks. To the long side, there isn’t a single stock out there worth holding overnight to be quite honest, and after today’s rally, I would still have a hard time doing so. However, we want to provide opportunities to grow the portfolio any which way possible and so as a result we will be looking to provide day-trade setups that our subscribers can take advantage of while the market tries to figure itself out. So be on the lookout for this additional feature in the next couple of weeks as we roll it out.

Here’s our Nasdaq and S&P Charts…