Friday, August 8, 2008


About Shark Watch

Friday, August 8 - 4:37 PM

Afternoon Comments

About the only nit we can pick about today’s trading session is that volume could have been a bit heavier. However, outside of that, there’s no arguing that it was a very strong day for the bulls. Breadth was better than 5:2 to the positive, the indices posted average returns of 2.5%, and consumer discretionary led with gains of almost 5% on big volume. Meanwhile, both the Dow and the S&P 500 were finally able to push past short-term resistance and make a higher high while the Nasdaq bounced mightily off its 50 day moving average.

Adding fuel to the fire of lower oil and a surging greenback was the fact that few were positioned to take advantage of today’s strength. It’s also safe to assume that some bears were indeed squeezed in the making of today’s trading session. Of course, the big question now is if the bulls can follow through. It’s been quite some time since we’ve seen any sort of continuity between trading sessions, and chasing strength and pressing weakness have both turned out to be losing strategies lately. As we’ve said on many occasions, one of the hallmarks of a bear market is the propensity to sell strength and buy weakness, and today’s huge rally notwithstanding, that’s exactly what we saw once again.

Yes, the market was able to see further technical improvement, which is a fact that needs be respected, but make sure you take proclamations that it will be clear sailing from here on out with a grain of salt. The only thing we’ve been able to count on recently is that nothing about this market right now is simple.

Have a great weekend, and we will see you on Monday.

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