Bulls Go Into Climax

I was surprised last Friday by how strongly the market surged when I had expected it to at least retrace a little bit. The Dow was up 153.35 points in a single day! So, am I wrong that the market needs to retrace at this point? Not really. I may be just 1 day off from my expectations. While investors are celebrating the bullishness, I see 2 major problems with last Friday's surge. One, the Dow surged with a huge volume surge. Such a volume surge after such a strong run up is called a Buying Climax. Such a surge in volume on a single day usually exhausts the bulls and lead to a significant retracement. Two, even though the Dow broke the 12800 level nicely, it is now up against an even stronger foe... the almighty 13000 psychological resistance level! With the Dow this overbought on a short term basis, coupled with a buying climax, I really see no reason why a significant retracement would not happen within these couple of days. I will be hedging my market based positions to delta neutral on Monday opening.