Tuesday, June 16, 2009
Equity markets are trading higher overnight. These markets are rapidly approaching 50% of the break from Sunday night’s high to yesterday’s low. This will be a critical area as traders will have to decide at that point to continue to add to the move.
Based on the events the last two days, it is clear that investors are still in the “buy the dip” mode. Yesterday’s break finished very close to 50% of the range of the past 30 days.
Speculation that the global economy is in a position to turn later in this year is the primary driving force behind the rally. Money has also been leaving the precious metals market which means more cash will be available for equities. Finally, we are coming into the end of the quarter, which could mean institutional investors who have missed the rally will “chase the market” in an effort to capture some return.
If big money begins to chase this market then there may be a huge spike to the upside. This is why it is still not safe to get short. Many analysts have been …
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