Its a good thing that I have been wearing a neck brace as a result of all the wild swings in the market. Today it came in very helpful. If you believe the financial writings of today, yesterday we were on the verge of financial Armageddon. But Bernanke and Paulson came to rescue at the last minute, and today you throw a little rate cut on top of that and you have a lot to celebrate. Up goes the market.
Now I do believe that the whole Bear Sterns affair was very serious and if it was allowed to fall into bankruptcy we would all be a lot poorer today. I think there is a lot to still play out there, but the last couple of days have shown a couple of very positive things for the future. One, the Fed has made it clear its not going to let this credit thing get out of control; and two, interest rates are way down, which only means good news down the road for the market.
If the market is now confident that no matter what else emerges from the sub-prime closet, the Fed is ready to deal with it, as I think it will soon be, then I also believe we are about to be off to the long side race in the market in general.
The boom in the market today turned all our momentum indicators back to the long side and our all important slow momentum indicator is back in neutral waters. Once again, follow through is the thing to watch for here. Some time in the next several trading days we need another thrust upwards to give us the confirmation that we all leaving the market bottom behind. That will be the time to jump big time back into the market.
Check out our Top 25 Lists to see what looking good and bad, along with an update on our TradeWinds Black Box returns.
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