Did yesterday's fizzle suck in bears giving them false hope yet again? Well, given that the market is now higher than yesterday's highest point and is only 10 pts away from the previous rally high of SPX 930 I'm stepping aside from the morning short trade I had in mind.
But I will stress again, morning strength like this is indicative of emotional buying which I consider to be poor market action. Ultimately moves made in the fashion tend to get reversed but it doesn't have to happen right away. For instance, a lot of the downside that occured in Feburary was emotional selling which didn't get revesed until several weeks later.
The way the market has gaps and runs like this on both the downside and upside makes it difficult for traders to capture any swings unless they hold overnight but doing so doesn't allow them to manage risk effectivily given the gap action.
Keep an eye on the QQQQ which hit a rally high of about 35. That will likely serve as a magnet for this move.
I might end up actually playing the bull side today for the "bear capitulation" trade. If the strength can hold here there is no resistance until SPX 930, QQQQ 35ish.
Be careful out there...
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