Wow….. last week I wrote beware to pick any bottom, and now the market has been rallying for 3 consecutive days. Positive earnings from leading companies and plunged oil price boosted the rally. Now the interesting question is: “Is it a true rally?
I still believe it is a minor rally. We are in the Bear Market and it needs time to heal the economic conditions, particularly the subprime mortgage turmoil. My technical indicator shows a nice upward move, a consistent higher high and higher low trend at SPY. If the market breaks SPY 130 and passes 50EMA, I expect market will be getting stronger. Otherwise, it will fluctuate around SPY 125 – SPY 130.
Pick your trade carefully and do with good money management. Indeed, you can use the minor bullish trend to take some profit, but remember, use tighter stop if market reverse back down. On this situation, beware to put position against the trend (bullish). If oil price keeps going down, I expect the rally will persist.
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