We started off a bit wobbly this morning but we held technical support where we needed to, and that helped to bring in some buyers. We had good breadth and OK volume, but the dollar was the main driving force. The dollar weakened as the euro strengthened after it become clear that the eurozone will work to prop up Greece. We have been very strongly inversely correlated with the dollar lately, which is readily apparently as gold, oil, steel and commodities have been leading the market up and down.
There were some good long trades to be had today and I wouldn't be surprised to see some more upside in the near term, but many don't trust this bounce at all and expect that we'll have an opportunity for some aggressive shorting fairly soon. I know a lot of market players are rooting for this market to jump straight back up and resume the sort of action we saw in the latter part of last year, but conditions have changed and we are dealing with much more severe headwinds.
According to Sentimentrader.com, the trading days around Presidents Day have had a negative bias. Since 1976, the Friday before the holiday has been positive only 26% of the time, and in the last 18 years we've only be up three times. I wouldn't make any market bets based purely on those statistics, but it is something you might consider if the bulls start to waver......
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