C’mon and bounce wit me…

What a bounce that was.  What does the 400 point up day mean in context of all the government intervention we have seen lately? you may ask.  To me, it assures me that we are in fact in a wave 3 decline.  First, ask yourself when the last time you have seem back to back 400 point moves in the $INDU.  It’s been a while right?  And we all know that these large volatile moves are most likely to occur in down trends.  So far so good right?

Mole stepped out to take his woman to the beach tonight.  So I am covering with a short little update.  We were cautious that a bounce should be nearing, but I think very few of us expected the 6% reversal that we got.  I sure didn’t (4% maybe, but 6% from lows to highs is quite a move for an INDEX).  Seriously, when did we become China or Russia?

One target area in the $INDU is being tested right now.  That would be the 11K range (around 11050).  There are some additional resistance points that should be discussed also.  First would be the low of 9/11, as this would provide an interesting wrinkle in the wave count. This first critical level is 11098.  If this level is breached, we would most likely have put yet another 1-2, which is starting to get hard to believe, even for me.  There is a range around 11200 that is another critical resistance level.

A number of indicators have flashed a very bullish sign.  This includes a BB reversal on the indexes, a issued buy signal on the $VIX (3 now), as well as a turn up in almost any oversold oscillator.  In the face of a 400 point up day, the bullish potential here should be considered.  A number of things say a larger bounce could be coming.  We will just have to see where we go from here.

The $NYHL crossed the 3 day average, but until we close in on the 5 day, we won’t believe this rally has “real” legs.   As you can see, the $NYHL has been in lower territory recently, and we would expect to see it there again.

Here comes the government news and the futures are shooting higher.  I will post what I have here and perhaps post a quickie evening or morning update with our thoughts.

Skål!