Monday, December 8, 2008

Good Start To The Week

Although they finished off the highs of the session, the major indices kicked off the new week by posting solid gains and moving past short-term resistance levels. By the close, the indices were able to add an average of 3.8% on breadth that was just better than 3:1 to the positive. Financials and materials led to the upside, and while each of the major S&P sectors closed in the green, the so-called defensive areas lagged.

Last week’s encouraging response to a bevy of bad news had put the market in a position to make some technical progress, and this weekend’s announcement of Obama’s stimulus package helped to make that happen. The test, however, will come once we get a pullback. Will investors continue to buy weakness? So many times over the past year, every instance of strength has been used as an opportunity to sell and/or short, and I’ll be watching to see if that tendency changes.

I'm optimistic that we could see some upside follow-through into the end of the year, but that doesn’t mean to go hog-wild.

No comments: