MARKET COMMENTARY

The U.S. Treasury’s plan to restructure bad debts from banks had boosted the market to a high that we have not seen for a long time. The last half hour of surge created a bullish mood for investing community. For this reason, we can expect a follow-up bullish session for Friday. Nevertheless, it is premature to call the market bullish at this point. There are still a lot of uncertainties and state interventions such as the short-selling curbing. Much of this financial control measure has not been fully digested by the market. So, the impact of various state interventions is largely unknown. Furthermore, most investors have yet to mull over the great loss they suffered in the crash this week. Sentiment is weak.

Until the chart breaks the resistance, I cannot say the Dow is turning bullish. The market is still very fluid at this time. Once the trading community gets over with the positive government action, it may dump the stocks for fear of losing them in the next bearish wave. Yes, we can expect many profit takings. We can only comment on the next market move one day at a time. Meanwhile, the resistance for Dow is at 11400 level. Depending on the market behavior when the Dow reaches the resistance, there may be opportunity to short the market once more or, even better, to sell Bear Calls at higher strike level.

Watch out for Gold price. The Gold is moving in opposite direction of the Dow. There is opportunity to short gold on Friday. Try the Gold ETF - GLD.

DJIA Daily Chart

I have never seen Russell (or even as an index) could surge this much - an almost 7% gain -in one single day. Due to its extreme bullishness, I won’t be surprised it would not go higher on Friday while other indexes are moving up. At least, it may not move higher as much as others, depending on the magnitude of the increase in the indexes.

RUT Daily Chart

I actually welcome the strong rebound of Nasdaq. It has been grossly oversold thus far. The resistance is way too far for the index to break. Hence, there is a lot of opportunity for me to play with this index later. Stay tuned.

NDX Daily Chart

STOCKS TO WATCH:

GLD - Bearish pullback
WB - Bearish reversal
NYX - Bullish breakout
BA - Hammer pattern

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