What A Come Back!

The Dow was back up by 213.97 points today as crude oil rebounds on a sudden weakening of the dollar, bringing the energy and basic materials sectors through the roof. Energy and Basic Materials were the laggards yesterday turned leaders today. Bulls also got some encouragement from the Jobless claims and retail sales numbers today as they turned in better than expected. The jobless claims and employment numbers so far seemed to point towards a positive jobs report tomorrow (see economic calendar) and reinforced my economic recovery scenario as well. In fact, the bulls did a lot better than I expected today as I would deem a 100 points turn around over these 2 days to already be a strong and significant reversal of sentiments. So, how do we know that this is not just a Bear Rally? The fact is, we don't know yet. For now, the move is significant enough to qualify as either a bear rally or a key reversal as it is the biggest single day rise since April. What will tell them apart will be the action over the next few days. To qualify as a key reversal day, we need to see yet another significant follow over the next few days. If the Dow failed to follow up but retreat back down significantly, then it could simply be a bear rally. In technical analysis, its all about the significance of each move.