Thanksgiving Holiday started off with bang by holding on to Friday’s enormous gains and then adding more to the tune of +6%. The most interesting part of the day however came at the very end, when the markets were up about 8% or so, and in the last 10 minutes, sold off heavily to put each of the indices at or below important levels of resistance, and as a result, though the markets made significant progress from a percentage standpoint, there was little to no progress made on the technical side of things.
In fact, from a bearish perspective, things are looking good for tomorrow. The stocks are right below major resistance levels, after rallying over 13% in two days; any failure to push through these levels, could send the stocks tumbling downward. Let’s face it, the crisis is not over and done with, just because we have had two positive days in-a-row. In fact, the “V”-shaped bottom the index put in bodes well for the bears as these types of bounces are very difficult to sustain.
But if you’re the bulls, you are going to need to put in a nice run past 925, and when the next wave of selling kicks in, then hold on to that 850 level. Now that’s the ideal scenario if you are a bull, but the chances of that happening are not that great. Instead, if I were long in this market right now, I’d be looking at taking profits on this rally that seems more like a gift than anything else.
Here’s the Nasdaq and S&P charts…