Wednesday Outlook: Out of the Blue? Well, Not Really

Well, not really. This type of rally has been building for some time given how oversold things had become. It’s also why we closed our shorts and went to cash.

This rally began Monday night in Asia when Japanese authorities directly intervened in currency and stock markets. The rally then spread to other Asia-Pacific indexes.

In Europe a major short squeeze occurred with Volkswagen when Porsche raised its stake causing a major squeeze in the stock [up 93%] which spilled over to the German market and most other indexes as well. In fact, lil’ ol’ Volkswagen became the world’s largest company by market cap. Huh? Yep. I can remember long ago when General Motors (GM) executives laughed-off Volkswagen as a joke. They ain’t laughin’ now, eh?

Things weren’t so rosy in the US as Consumer Confidence was down by the largest amount in 41 years and home prices were off 17%. Nevertheless, stocks flopped around buttressed by rumors the Fed will lower interest rates today by a large amount. During the day yesterday, as volume dried up during and after the lunch hour, the 2:15 buy program express showed up and “bam” we were off to the races.

Volume was heavy but especially so in the last half hour. Breadth was excellent as sellers were either washed-out or getting out of the way as Da Boyz steamrolled all in their path.





















I noted the DeMark weekly sequential Indicator pointed to a “9” count this week which would signify trend exhaustion when viewed on weekly charts. Below is that chart (click to enlarge) again thru “yesterday” with the “9” clearly visible. [This chart does not include all other proprietary indicators.]

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