7/8/08
The markets has a volatile morning, pull back early afternoon and then rally very sharply at the end with financial sector short covering rally. The tech index(nasdaq or nsadaq 100-NDX) complete highs of last 3 days. The Dow has formed 2 days reversal pattern with bullish engulfing and so is S&P also break out higher than yesterday close. The RSI of Dow has strength 31 with buy signal kick in. It is early to call this is the bottom of the market. First, VIX or Puts/calls ratios not spike in fear zone and reverse. Second, NYSE new lows/new highs not really commit in reverse too. But the institutional selling seems to be done. I consider today's rebound as an oversold rebound with bias positive. Need to see more strength to post this is indeed a reversal/bottom. The crude oil future continues selling off the lows of $135(which is close in the uptrend line zone). The horizontal support is $130-$131 area. So, if tomorrow the oil keep going down and break the $130 mark. It would be very positive for the market. Otherwise, the Dow 11440-11460, S&P 1290-1295 area would be the top ceiling of current rebound to overcome. After market, AA posted better than estimate earning and provide good strength for tomorrow.
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