Today was a pretty strong day for the markets. There was some early volatility in the morning, but after lunch stocks just started a steady climb that carried out through the close. It's nice to not see a big day like this with a huge sell-off just before the close (which has been the case lately). Both the S&P and DOW were up more than 4.5% while the tech heavy Nasdaq was only up 3.4%. Also, Oil finally has shown some strength (as I expected). I still have my OIH calls which I expect to see some considerable upside in over the next month or so. Taking a look at the markets though, they seem to be forming a symmetrical triangle at the moment. While, the pattern still needs to fill a little more to be influential, it is worth noting that this thing could go either way. A breakout to the down side would mean disaster for the bulls and likely by-pass the previous lows. A breakout to the upside (which is what should happen given the distance from the 200-day moving average) would help reinforce a near-term bottom for the markets. Having said that, I bought some index put protection today in case things get worse near term.
The EURO is interesting right now. It's shown considerable weakness since late July, yet it's finally reached some support levels (both Fib fan and retracement) and has begun consolidating. I am expecting the dollar to strengthen a bit more (pushing the EURO down) until it hits the Fib retracement level below it. After that, we should see some weakening in the dollar, which should also help lift Oil prices.
Be on the lookout for earnings tonight and tomorrow morning. Nearly 17 big name companies report before the open tomorrow, so we should get a cleaner picture of things to come with their expectations and forecasts. As of this post, American Express beat estimates and Sun Mirco lowered guidance...I'll re-cap earnings tomorrow before the bell!
