"Until Something Significant Happens..."

I mentioned before that the market is likely to behave the way it has until something significant happens. Today, that significant thing happened as US President-elect Mr Obama won for the economy the second half of the economic stimulus plan. Mr Obama PERSONALLY lobbied for and won the $350 billion in bailout fund, including a slew of other plans that pushes the whole package to above $900 billion. The Obama administration will no doubt be one of action and focus on the well being of the US and will no doubt be a confidence booster for the economy and the stock market.

In fact, the Dow reflected this confidence ahead of the news by forming a dragon tail formation, which is a reversal signal consisting of a long tailed candle forming at the base of a significant retreat. This, along with the volume spike, makes it an extremely credible reversal signal. Tomorrow's options expiration day will certainly add to the volatility. We need to see a strong follow up in the form of a significant up day tomorrow to confirm the dragon tail formation.