The Amazing Relief Rally!

Hurray! A major financial giant made a profit at last! Hurray! Everything's going to get better! Hurray! The economic crisis's over! Hurray! The stock market is going to explode!...... NOT!

I know those were the wishful thinking of a lot of investors and traders as they watch the market action today, drooling. They were like quenched travelers looking for an oasis and found one small puddle at last. Make no mistake, one quarterly gain only makes as much difference to a company as a one day surge in a bear market. Like I said, yesterday, this market is way oversold and overdue a relief rally of the kind you saw today. In fact, I also mentioned that the relief rally could take the Dow back up to 7000 points, which it almost hit today. Today's single day relief rally also happened on a volume surge which discredits it even further. Volume surges which are not the cause of quadruple witching days can only be caused by exuberance or greed. A big up day with such a profile does seem to make it a lot less trustworthy.

I won't be surprised to see the market go up a few days more as most relief rallies take about a week to resolve but with the huge move up today (in fact, the biggest single day move for the year) along with its blow-off volume, I don't see why people are not willing to start taking some profit tomorrow. Yes, this still looks nothing more than a bull trap to technical chartists.