Folks, every time you see OIL, the DOW, NASDAQ, S&P500 and GOLD all green, we have a conundrum - one must decide what to do. OIL, GOLD and the three major indexes cannot all run green at the same time. This only looks to me like a bear-market rally ready to catch some people with their pants down.
Let's think about it for a second - we all know that the market will not recover until financials recover, right? (the S&P500 is loaded with financials). Well, we have had at least three CEOs (C, JPM and BAC) for banks / financial stocks say that they are running profitable in the first two to three months of 2009. Jesus, let's see, if you borrow money at zero percent from the government and lend to people at a 3% minimum and for some credit cards 30% - you better be making some kind of money! But let's be careful here. Have they gotten rid of their toxic assets yet? Have they written down everything there is to write down on all of the mortgage products? Unemployment is only growing (specially in the sub-prime world) and I am not sure who is going to pay for all of these homes in the foreclosure process that have yet to be foreclosed...
Again, do not get caught with your pants down. This is not a true rally - but one very well manufactured for now due to the herd mentality, poor shorts and politicians and the FED making statements that are designed to move the markets up to calm the general population.
There is major resistance at around 7500 on the DOW; that is, if it touches 7500 and furthermore, the DOW will not break 7800 - 8000 for a little while.
Enjoy trading!
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