Although today is the second trading day of the new year, but to me it is more like the first real full trading day with everyone back into action. The couple weeks between Christmas and the New Year holidays, trading was light as anticipated. But during those two weeks, the technicals were changed from on the verge of breaking down to breaking out. Looking at the market's performance today, the Dow loss around 81 points, SP500 gave up little bit over 4 points, and the Nasdaq 100 loss a point. While the market closed with minor losses, the advance/decline and the up/down volume are positive. Even new high/new low is positive. These market breaths show a slight underlying bullish sentiment. Now does this mean we are entering a bull market? Far from it, we are still in a bear market until signaled by the market otherwise. These positive sentiments only reinforce the recent breakout could possibility rally the market up to the next resistance level (see charts below.)
One must not lose sight of the primary trend. As a trader, one must follow the market's trend. In a bear market rally, exercise cautions on going long and make certain to have tight stop to prevent big losses when the rally terminate. Have a great 2009.
