Was today the carrot to yesterday's stick? Is it like bailout plan 60 points up, no bailout plan 80 points down? Was it the spirit of Jewish holiday that calmed the nerves and brought optimism to trading floors?
Many breadth measures were nicely positive for the day. But, again, there were more new lows registered than new highs. No important buy signals were triggered on daily charts, let alone weekly or monthly. Some measures of volatility pulled back a bit, but they are still high.
Economically, fundamentally, nothing's really changed from yesterday that I can see. So, how are we going to justify this bounce one day after yesterday's massacre? I will stay with my carrot and stick analogy until further notice.
You gotta love it the way media spin things. They were saying because of denying the 700 billion bailout, 1.2 trillion dollar was wiped out yesterday, therefore, people lost 500 billion (1.2 trillion - 700 billion they did not give to bankers), well, today, half of yesterday market losses were recouped, 600 billion dollars were generated. So, US tax payers are ahead by 100 billion (700 billion they did not pay - 600 billion market loss), good thing they did not approve the bailout, they actually made money -- till tomorrow.
What a show!
I decided to do a couple of wave counts, but before that, this is the chart with some breadth indicators that we have seen before
This is my preferred count of S&P
I usually think of volatility as a change of tide in a deep river with no breaks, while the tide's in full force, the river looks calm and poised, when the tide's achanging ripples and white horses appear.
Let's see what tomorrow brings
PS. A friend of mine emailed me with an interesting remark on this post. He said that looking at the charts with the wave counts, the downward channel is not a channel through which he would want to steer his money.