Bulls Fight Back!

Well well, today's market action was truly out of my expectations. The bulls fought back and closed the Dow 172.6 points higher even though it opened over 100 points lower! The Dow is once again back up to the top of its declining channcel line marked by its 30MA line. The bulls really got excited as traders all over the internet predict a bullish breakout. Could the final capitulation have ended with last month's decline? Seriously, I don't think so. Traders usually get over-excited over one or two day market actions without looking for more confirmation. From the way I see it, today's market action is encouraging indeed for it occurred at an extremely important junction but it needs to prove itself with a breakout. As long as it remain below its declining channel line, I would not be convinced that the bottom is set. But with the recent market action, I am more convinced than ever that the market has only one last capitulation downwards before a reversal takes place. The bottom is definitely near and adventurous investors could start accumulating equities strategically and hedging them with options using the married put options strategy in order to hedge against the final capitulation if it comes and still gain from the rise in stock if the final capitulation does not come.

The market is probably going to go sideways tomorrow ahead of Friday's Jobs Report (see economic calendar). The Jobs Report is going to turn in lousier than last month's number but will the over enthusistic bulls take it as the peak unemployment rate and starts buying again? We will only know when Friday comes.