In order for this rally to be more than a single day event, it needs to demonstrate some sustaining powers by following through with a few more up days and possibly move the DJI back up to test the support it had broken in the 7500 level, and the SP500 back up to test the 750 level. And maybe during this bear market relief rally, some market internals will be strenghten for the market to make a bottom on its next downward move. Lets not lose sight that the bear market is still in force, and a lower low for the DJI is still to come. So let make some money on the longs from this bear market rally while it last, and keep a watchful eye on the market to see if it can put in a bottom in the latter part of March or in the month of April. If a bottom is not made within this time frame, then it will be a long tough year for the economy and a recovery in 2009 will just be a dream.
Here are the charts for the indexes with my commentary embedded, click on the image to get a larger view:
There were two weaknesses today and they were the crude oil and gold. Crude pulled back a bit from its recent run up, but that did not discourage the big oil companies from participating in today's stock market rally.
Gold fell back to under $900 an ounce and exhibited a failed bull flag pattern. The bull flag pattern failure can turn into a bear flag if it break below the trendline support. In the short term, if a position is establish either on the long or the short side, tight stop must be exercise since it is at an inflection point that it can reverse just as quick as it breaks down. But I do share the longer term view that gold will rally back up to test and break the 1000 level before the bull move is over. For now, direction is unclear. Need more confirmations on its intended direction.
