We broke the critical technical resistance today, as we ended up higher than 50 DMA the first time since September 3rd, that’s the longest stretch since August 2002. Now both 10 DMA and 20 DMA are edging higher.Stocks have shown advances since their Nov. 20 low. Trading has been less volatile than it had in the previous three months. In the past 54 trading days, 18 had moves of at least a 5 percent. In the previous 53 years there had been only 17 days with moves greater than 5 percent.
Since Nov. 20, the Dow is up 18.2 percent, the S&P 500 is up 21.4 percent and the Nasdaq is up 20.8 percent.
How high can we go? Santa Rally until Obama takes office in January? Can Obama's $750 billion stimulus plan (in two years) help us out of the recession?
From Afraid to Trade: SP500 Fibonacci Price Clusters and Confluence Chart
According to Yahoo! Finance:
Many of the signs of a bottom have been evident in recent weeks, noting:
1. Cash levels in 401(k) accounts reached an all-time high in October, a sign investor sentiment hit extremely bearish levels, a contrarian indicator.
2. As of November 2008, the 10-year return for the S&P 500 matched its worst performance in history. Because of mean reversion, bad (or, in this case, awful) 10-year returns typically lead to positive 10-year returns going forward.
3. Treasury Yields Falling to zero — and negative for short periods — is a sign of panic among investors who would rather lock in a quantifiable loss vs. risk putting money to work in "riskier" assets.
Is Nov. 20 the bottom? Still I think we are at Eillot Wave 4, a bear market rally right now before it turns down again.
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