A Change in Character for the Market

Tuesday we sold off mid-day and finished strong that was a tell. I noted that the correction is over, but we won't go straight up but i do think we rally until year end. I will be buying the DXD until 46 level, (Ultrashort DOW, goes up when DOW goes down) as it gets weaker to have insurance in the portfolio for the downside. We had bleak economic news yesterday, Oil prices saw a biggest one-day drop in dollar terms, but comments from the Fed vice Chairman spurred the markets to a huge and impressive gain. The technicals of the market are improving, the supports have held very strongly (see chart) However the fundamentals are weak, subprime and housing weakness haven’t gotten better but remember the market in forward looking and is expecting rate cuts, Fed is back on the side of the equity markets, and the fund managers have to buy the stocks that have done the best so they can show their boards that they didn’t miss the boat on the good stories of the year. So buy the weakness will work when adding to positions at this time with a short leash, this is no time to roll the dice.




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