Today's action is more encourging than yesterday, Yesterday can be attributed to a technical bounce, like a rubber band, if it is stretched too far on one side, it will bounce back. Today, there are actually a seasaw fight, and at the end of the day, the Bull won convicely.
There are some macro economic reasons as why, the good initial claim report, the stimulas package passed by congress, and some good earning report from qcom, nokia etc.. Also, we will have another FED meeting next week, there are whispers as another 50-75 bps cut will forthcoming. As long as there is a FED equation in the picture, Bull will be enboldened.
However, how vigorous this rebound will be entirely depends on the earning and economy. The financial crisis, housing bubble and slowdown of economy are real threats, and they will not go away overnight, there will be days when some bad news will come back huant the market..
Tomorrow, there are be job reports, hopefully, it is strong enough that can alleviate some fear about economic recession.
If we are entering a range bound trading period between now and Jan. 29th(?), or the bull wants to make the January looks better (so the whole year looks brighter), we could see some up days following, but I will pay particular attention to the DOW at 12600 level, that could be the next resistance level.
The VIX is coming down quite a few points from the high achived two days ago, however, it is still high, so, do not be too surprised if the market makes a sudden turn. For me personally, it meant to hold my position short (daily), and take profit as quickly as I can. Secondly, judge whether the market is a directional or a attrition war, if it is a directional, go with the flow, if it is an attrition, either stay out, or trade agains the trend.
finally, the risk managment is the formost important aspect of the trade right now
