The S&P 500 is up almost 25% from its March 6 low, and is knocking on the door of the widest and deepest resistance zone in the bear market at S&P 820 to 920.
Yesterday, we discussed the analysis done by Mark Arbeter of Standard & Poor's. Mark concluded that the market is due for a pause and then a "decent advance" before we see another correction.
He ended his report with, "We would use any strength in the stock market to lighten up and then wait for the next bottom to develop before adding to positions."
His analysis is impressive, but this market doesn't read the newspapers. And bullish behavior like that of the past 11 days begets more bullish behavior.
And speaking of behavior, bad news was ignored and the market rallied by almost 175 points.
The bad news was that Q4 GDP showed a 6.3% rate of contraction, and jobless claims climbed 8,000 from the prior week. So, readers, if you're a bull, in the convoluted thinking of the Street, bad news is good news for the market.
We haven't yet reached a point where I'm ready to go from a bear to beef menu, but if we get many more weeks like this, we'll all be eating grade-A porterhouse while the bear slumbers.
For now, though, why not look at my Trade of the Day, the U.S. Dollar Index Bullish ETF (NYSE: UUP). UUP pulled back to the 200-day moving average, where the stochastic has issued a new buy signal.
Sam Collins is a contributor to OptionsZone.com.
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Reader Comments (Page 1 of 1)
3-28-2009 @ 6:01PM
william lindblad said...
If you wish to determine if the market is to be bull or bear in the coming months than you should look beyond the market for guidance. By this I mean the peripherals, the hidden items that could have extensive economic impact. We all get to see the Treasury and Fed actions along with job loss and manufacturing contraction and all of this is the net result of housing and banking. All of this is well on the radar and has abundant focus.
Other than some passing comment, there has been little on the massive drought conditions in Australia and Argentina. There was little mention of pork shortages in China and rice export controls for India and other Asian countries. Obama recently made some small comments regarding problems in the U.S., specifically Atlanta and So. Cal. Both of these are water related and if the drought moves North, the bad news that will result will move the market and I doubt that it will be higher.
We still have the commercial real estate sector to deal with. It is a black hole as much of this is private investment and the damage out there remains and unknown. It is extensive in scope, the result of the boom and suffering the same fate. Even with mortgage rates at 50 ear lows and credit slowly returning, the economy has taken a beating and selling high end properties to people with insecure employment will prove difficult with the same applying to opening new shopping centers when consumers are not spending.
This saga has many more months before the dust settles.