Thursday, May 27, 2010

Market Comment 05 27 10

The market finally had a great day. It opened strongly and even gained momentum going into the close. As I said in yesterday's blog, the market has been extremely oversold and due for a bounce.
Many of the market indicators I follow have now turned up.  To add to that, we have the "bullish hammer candlestick formation" mentioned yesterday, as well as a double bottom put in at the 1040 area. Technically the outlook has improved significantly.

Even with the sudden positive change in sentiment, I plan to proceed causiously: as I often say, one day does not make a trend. 

None the less, due to the strong market action, I did liquidate our US Dollar Index ETF (UUP).  UUP is generally considered defensive and, more often than not, moves inversely to stocks. I also took a 5% position in the S&P 500 index ETF, SPY. If an uptrend develops, I will add more equity positions. If, on the other hand, the 1040 support level does not hold, we should expect more downside.

No comments:

Post a Comment