The markets rebounded nicely today. The bearish move down ended yesterday, at least for the moment, with the rejection of lower prices and the resulting hammer candle yesterday. The market indeed hammered out a bottom in classic fashion, with sentiment extremely bearish at the bottom. The Fed cut the discount rate by 50 basis points (not the Fed funds rate) and the market opened nicely higher and in a very choppy manner closes on a strong note. I’m not sure the Fed potentially trashing the already trashed dollar while bailing out irresponsible borrows and frothy equity markets sends a good signal for the future, but today Mr. Bernanke is a hero. The market volatility is still very high, with wide choppy swings throughout the day. The financial sector was strong again, and for now has confirmed the double bottom. Market could work higher to relieve the oversold condition. Longer-term trends remain down. Retest of lows in Dow would be normal, however upper end of that hammer candle of last Thursday should hold. If prices start accepting levels into that long tail, another down-leg would probably develop.
Gold made a nice move up, as well it should with the implication of a lower dollar. It is still in a coiling up trading range. I’m standing aside there for now.
Thanks to those who have been buying books on the book page. I also just started an Amazon eStore. I’m still working on the content. The books rotate in the ads to the left, but if you click the red bar at the top of the ad it will take you to the store where you can see several categories of books, far beyond what I have on the book page here.