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Sure enough the rabbit was pulled out of the hat today thanks to Bernanke, Geithner, and our good friends at Goldman Sachs (lol). They jammed the DOW hard just as the 50 was starting to slip through the 200 this morning and away the market went. While this is a good start to a potential new leg up in the market, it absolutely must have consistent follow thru on good volume in order to force the shorts to cover and get a short squeeze going. If we instead have a big "give it all back day" on stronger volume than the up day before it, or volume starts a slow decline as prices climb then we will be in trouble again quickly.
The VIX (Volatility Index) did confirm that it is in a downtrending channel today but it has so many short term uphill channels passing through in this area that it will reverse and start climbing again if we have any bad economic news in the next few days. The time and sales log showed there were numerous institutional buys and hedgefund activity which is a good sign. There are other moving average retests happening right now that are also quite positive, the DOW is working a 5/200 on the weekly chart and also its monthly price bar caught support at the 100 month EMA.
The SPY ETF caught support at its 150 month EMA and the SPY is also working a 5/200 weekly and 5/260 weekly bounce. Gold dropped out of its 2 1/2 week up channel today. The QQQ (NASDAQ 100 ETF) caught support at its quarterly 200 EMA and is laying up nicely for its 5/200 bounce on the day.
Overall, you could say they stepped in when they absolutely had to and not a minute before but at least they did come in with enough push to stop the death cross on the DOW. With a few days follow thru, we could see the NASDAQ 50 emerge back topside of its 200 just as it did the first week of September 2010. The early bird buyers definitely went in today but many investors will want to see a few good days back to back for a change before everyone goes back in.
Alan
