Suspiciously Optimistic Day...

FUNDAMENTAL ANALYSIS
319.54 points up in a single day! This is the biggest single day surge since 18 Sep 07. This rally is a really suspicious one because there really wasn't anything big in the releases today. Dow futures was pointing sharply higher all morning before market open, coincidental on the upbeat earnings of Walmart. Why would I regard it as coincidental? Because the earnings on one company do not move the market! Wouldn't the upbeat Walmart earnings point to an optimistic earnings season ahead, justifying a price in right now? Of course not! The biggest mover of the financial markets continue to be the Financial Sector and we all know that the earnings for the Financial Sector is going to be lousy with the subprime mess magnifesting across the board! My take? I see the PPI and CPI figures to really move the market in some definite directions. Investors want to see more evidence of a rate cut magnifesting in the form of a slightly higher PPI and CPI driven by higher energy. Hang on to your seat belts... this is just another magnifestation of the volatility in the market. (Yes, volatility means violent up and downs, not just down and down!)PPI will be released tomorrow (see economic calendar).

TECHNICAL ANALYSIS
So, what do we have today? A 319.54 points surge with moderately high volume. Conclusion? No real conviction as a key reversal day. In volatile market conditions, I don't want to base analysis on single day moves but rather take it to a 2 days time scale and see what happens tomorrow. Volatile market moves in sets of 2 days: Big up + big up = real up. Big up + big down = we all expected it. Big down + big down = real down. So, let's see what happens to the goldilocks tomorrow before deciding.


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