Selling continued this morning as bonds were racing higher. Volume was running hot, but after 5 straight days of selling the market ran out of sellers. Before the noon time hour, it appeared the market had set the lows for the session and would try to work higher. By the close the Dow was up nearly 100 points well off the session lows. Bitcoin continued to plow ahead as the cryptocurrency continues its tear. Today was a nice reversal with volume just inching higher than yesterday. It was a good sign for the bulls.
Bulls dropped week over week ending this week at 25%. While not at an extreme low we continue to see this pattern. Bears jumped to 37% on the week, but it really is not a surprise after the market suffered after this recent selling. Today’s move did look exhaustive where sellers capitulated. By no means was it a huge capitulation. Nonetheless, we did see sellers get washed out. It will be nice to see to see this market build upon today’s gains. The remaining bulls need to see follow-through.
ACIA is an IPO we mentioned here recently and it continues to act well. Some profit taking for those who were able to take advantage of our alert is a prudent move. On the short side, around 10:30 GOOGL was looking like a solid short. However, this was quickly erased with the push into the close. The short side of this market is a dangerous game. Just when you think a stock looks good for a short buyers show up and nullifies the short signal. Stick with what is working and for now it is the long side of the market.
The Federal Reserve is trapped at the moment and raising rates will likely not occur this year or even next year. We do know under no circumstance do we fight the Fed. Central banks around the world want to prop up asset prices. They need stocks to stay afloat and will try and accomplish this at all costs. Will a rate cut be in the cards soon? QE4 coming? No one knows, but nothing at this point would surprise us.
Today was a decent development for this market. We still have some work to do, but not all is lost. Have a great weekend.
