We needed a positive day following the intraday reversal yesterday for a positive technical setup. We ended up with one and, maybe due to option pressure, the S&P 500 ended up right at 850, which is a key technical level. The Nasdaq also closed right near a key level around 1,530, which is the 50-day simple moving average.
At midday, it looked like this market was all set to roll over, but some positive news from Barclays rallied European banks. We probably had some short covering in front of the long weekend and the Obama inauguration next week, and of course option expiration contributed to some pushing and shoving. With the European and Asian markets open on Monday, there is some added risk to holding and that may have influenced trading.
Even though the major indices finished in the green, the weak action in major banks including BAC, C and JPM is quite troublesome. This market is not going to go a whole lot more to the upside until the major financials find their footing. The way they are acting now, it sure SEEMS like there is another shoe to drop.
The bulls will have their work cut out for them when we come back to work on Tuesday, but the close today gave them a leg up. They are going to face some technical hurdles quickly, but it will be up to the banks to determine if they can build on this bounce much further.
Enjoy the long weekend!
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