Yesterday's triple-digit advance by the Dow Jones Industrial Average was
again the result of a focus onEurope. And whether here or there, the story is
that you just can't fight central banks when they decide to flood their
systems with U.S. dollars. On this side of the pond, weekly jobless claims rose
above expectations and regional manufacturing missed the mark (Empire State
Manufacturing Survey for September fell to -8.8 instead of -4). And there was a
flurry of other reports, but they had little impact on a market that is focused
onGreece,Italyand the ECB's every effort to save them from defaulting on their
debt. For the fourth consecutive day stocks moved higher, completing a run of
4.3% from Monday's close, and a Collins-Bollinger Reversal (CBR) buy signal,
to Thursday's close. Traders who took leveraged ETF positions on Monday's
buy signal should consider cashing in. And it would be prudent for traders to
close all other long positions this morning. It is possible that stocks could
make a further run through the neckline at Nasdaq 2,602 and the 50-day moving
average at 2,612. But an overbought MACD, and the vagaries of a triple-witching
day argue against holding long positions in a bear market within an incomplete
bear flag formation. Finally, the bounce from the August low to last night's
close is a 50% retracement of the fall from the July 7 high to the Aug. 9 low a
Fibonacci number. After breaking from major resistance at a triple-top and its
200-day moving average, the U.S. dollar pulled back closing the first of two
open breakaway gaps. The dramatic breakout confirms a double-bottom for the
buck, but there is no guarantee of an immediate follow through since patterns of
this type often take weeks or months to develop.
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