Some Quick Thoughts On Today’s Market Action…So Far

I’ll admit, as a person who stands to profit greatly off of this market should it bounce nicely in the coming days and weeks, I am
a bit exhausted by it and working off of very limited sleep. But it is more because of what we’ve been seeing this week, than previous weeks. It has just been insane the kind of price action we are seeing. But there is some interesting things that I’ve noticed of late, some positive some negative. Here’s the breakdown…

• The news was horrible this morning – rumors of Asian banks cutting credit lines, would have created a HUGE run on the European banks. Despite this news, the market, though it gave up the overnight gains, wasn’t able to tank on the news, and quickly reversed course and made new session highs. Once again that is a good sign that the machines realized that there wasn’t a lot of downside opportunity left in the market. Which is why those same machines started buying to the upside. 
• Volume is above average from recent readings but coming in at probably the lowest levels of the week. Still high though.
• Not seeing the short-covering yet, which means the bears haven’t been spooked out of their positions. 
• If the US market bans short-selling like some of the European countries are considering, at this point, it may help to keep the bears from selling every rip in the market. 
• My guess for us to seeing a nasty short covering will occur if we can break above 1172 today. Which is why I believe this rally today is nothing more than a bunch of noise, if we can’t break above that level TODAY. 
• Fear is baked into the markets, this morning when I woke up, I could feel a huge lump/knot in my throat, from what I was seeing, and even told my wife “I feel like I’m watching the entire financial system melt down! right before me!” – Interesting how I made those comments at the market lows of today. But I was sick to my stomach – even if I was 100% short, I would’ve been sick to my stomach. No fun seeing such turmoil. 
• Had fear not been baked into this market I believe that we’d be down well over 50 points on the S&P right now like we were yesterday off of false rumors of a French downgrade. 
• Sources of mine indicate that trading desks are burning up with companies buying back their stock right now due to how cheap their company stock has suddenly become. 

But like I said, today’s action is welcomed, but if we don’t break 1172, I have no way of putting any faith in today’s rally, and don’t believe we’ll see any substantial short-covering unless we break that S&P 1172 level.