Short covering rally

7/18/08

All major indexes were indeed made the bottom on weekly chart basis from 7/15/08 to 7/18/08. But this bounce mostly built from strong short covering of all financials and crude oil price drop. We need to see if there any legs beside short covering activities follow thought this coming week. Technically, crude oil future did break the uptrend line started from 2/2008 til 7/15/08. So it has made their biggest correction of the year. With government aid package announcement and SEC new restrict short sell rule on some major financial stocks, market did find the bottom on 7/15/08. I would expect there will have pull back from this strong short covering bounce. Also, as I said last post that market would make "W" shape retest lows rather a "V" shape rally to the roof and break the resistance area of 11750-12000 area too soon. There are lots of big companies announced their earnings and some important economic data. Volatility is high. The VIX indexe has just touch the uptrend line which indicate market might pullback from friday highs. We will see if there any follow Bulls on the way to catch this upward stream.