Monday, December 08, 2008

A rally with legs

The S&P 500 closed at 909 today, which is a 21% gain from the closing low of 752 on November 20.

I'm not even suggesting that the bear market is over, but a few characteristics of this rally indicate that it will last a while longer. Money flow is more positive than it's been since September, and breadth has been solidly positive for multiple days in a row. Most importantly, the chart could almost be mistaken for a bull market rally, if not for the insanely high volatility. Instead of the bearish norm of a few big up days interrupting a gradual downward trend, the last two weeks have seen a series of relatively small up days with one big downward "correction" on December 1.

So, although there's been growing optimism about stock prices, I'm inclined to respect this bear market rally until I see more signs of weakness.

3 comments:

Tim said...

Jody

do you have any information on the amount of stock bought with leverage or margin? Thanks for the posts.

Tim

adventurerneil said...

I'm very inclined to short this rally should it reach S&P 950 or more...

wooderson316 said...

Jody,

I thought you might like these:

A graph of the current megaphone pattern: http://tinyurl.com/6jkxke

The graph discussed:
http://tinyurl.com/6mc6kd

From quicktakespro.blogspot.com

Hey Tim, google your question and you'll get relevant data.