And….That’s a Bear Market Rally

And….That’s a Bear Market Rally

For those that are brave enough to trade this market, hopefully you’ve been using the advice I’ve provided with both SDS and SSO on my newsletter at www.vraletter.com. When I put out the update “What to Buy for a Bear Market Rally” at about 11 AM the market was down 300 points and began to rally. With the close in the Dow at up 550 points we saw an 850 point move higher in less than 4 hours. Talk about an insanely crazy market! But as I’ve been saying, this is exactly how bear market rallies look.

Once we hit the 840 level on the S&P 500 that seemed to have given us a final washout, and when the buyers jumped in, we went straight up from there. Then fear of getting left behind started, and we just kept going higher from there. We finished the day at the highs on very big volume, which is a great sign.

Technically, this has the makings of a good bottom. We had the big intraday swing right at the key support level. We washed out the weak hands on the dip, and then flew higher on good volume. We are going to hear talk now about a possible double bottom, but don’t buy it. Once the buying tires out we will go back own again as people realize that things really aren’t getting any better.

Keep in mind that days like today are about short term trading rather than long term investing. As I’ve been saying it’s important to remember that these frantic rallies occur only during bear markets.

Look for the move higher to continue…for a while at least…which means that the stocks I gave you are going even higher. Especially SSO. Look, I don’t like this erratic market anymore than you do, but we have to take what it’s giving us. This is simply not a buy and hold market, but that doesn’t mean that we can’t make good money in it.

Kip

www.kipherriage.com