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Stock Market Bulls Stick It To Over Extended Bears

Stock-Markets / Stock Index Trading Mar 11, 2009 - 01:55 AM GMT

By: Kingsley_Anderson

Stock-Markets Best Financial Markets Analysis ArticleThe big rally finally happened. Considering the extreme oversold readings on the indicators, a snapback rally was expected. All that was needed was a little bit of good news, which came by way of Citigroup 's announcement it has been profitable for the past two months. An announcement by Representative Barney Frank that the SEC would likely reinstate the uptick rule also helped move prices upward.


The DJIA made a whopping 5.8% gain today. However, it is still below its November low. The key will be whether it can get back above the aforementioned low.

The Nasdaq gained a whopping 7% today. It also is back above its November low. Resistance is in the 1400 area. Expect the Nasdaq to continue to lead.

What should one make of this rally? As per the rules of trend following, this is a bear market rally until proven otherwise. In bear markets, upside rallies usually result in huge percentage gains. Don't be fooled by one day, or even two days, of big gains. All one needs to do is look at the days where huge percentage gains occurred over the last several months to see they do not necessarily signal the end of a bear market.

By Kingsley Anderson

http://tradethebreakout.blogspot.com

Kingsley Anderson (pseudonym) is a long-time individual trader. When not analyzing stocks, he is an attorney at a large law firm. Prior to entering private practice, he served as a judge advocate in the U.S. Army for five years and continues to serve in the U.S. Army Reserves. Kingsley primarily relies on technical analysis to decipher the markets.
Kingsley's website is Trade The Breakout (http://tradethebreakout.blogspot.com)

Copyright © 2009 Kingsley Anderson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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