Friday Outlook: Bear Market Bounce

Previous lows were reasonably tested and we rocketed higher in a preprogrammed fashion. Every trading desk, hedge fund and no doubt the government had their fingers on the buy button as soon as 8,000 on the DJIA was breeched. It seems too pat sometimes, but that’s the way it is. So, is that it then? Hardly, but it’s a start. Maybe we’re just working off major oversold conditions we’ve outlined for weeks now.

Many bulls are betting on a typical seasonal rally and that may happen. But after that the major fear going forward is an unproductive trading range.

Volume rose dramatically and breadth didn’t seem by the data below to have reached a 90/10 day. But this is Yahoo/Finance we’re dealing with.














I value using DeMark weekly sequential indicators among other tools as a guide which can often determine trend exhaustion. Below is SPY in that configuration from our internal charts. You can see the current “9” count from two weeks ago. What we’d expect is a reaction. That might include some sideways movement and hopefully a lessening of oversold conditions. And, all things considered we’re getting that look. It’s a factor in keeping us out of short positions and in cash at this time.

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