We have been expecting a test to resistance and we said we could have a huge snap-back rally or dead cat bounce this week. Well, here it is and it is happening before the release of the Fed’s Beige Book (at 2pm).
The bulls have been known to climb a wall of worry and today’s 2% gains have come on hopes the U.S. could initiate new monetary easing plans or initiate new steps to help with the European debt crisis. Of course, the U.S. has its own debt issues but that is for another day right?
There was a little nervousness before the bell after the ECB (European Central Bank) left its key interest rate unchanged at 1%. Many were hoping for a rate cut and though ECB President Mario Draghi admitted that a few council members did call for one, it didn’t happen. The ECB said it will continue to supply eurozone banks with liquidity but many market pundits felt they needed to do more. Perhaps they are banking on Bernanke. Pun intended.
As we head to press, the Dow is higher by 217 points to 12,345 while the S&P is higher by 23 points to 1,308. The Nasdaq is showing a gain of 56 points to 2,834.
The rally has pushed the market right up to our near-term resistance targets which means we have 2 NEW TRADES to take action on.