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Applause for the Rally

What To Watch To See If the Rally Has Legs

What To Watch To See If the Rally Has Legs

Well, my short-term indicators were true to form and we had a rally today as I noted was likely in Sunday’s blog post. The question is whether this rally has legs and will continue up for awhile, or whether this is just a little bounce before the selling recommences.

In trying to make that determination, one thing I like to track is the 5-minute chart from the first day of the rally and the ensuing days, compared to the day prior to the rally beginning. In this case, we are going to be watching the 5-minute chart from Friday and today (as well as coming days) to see if all of the prices stay above the low price mid-day on Friday. In this case, what we want to see is that for the next few days that the market stays above that 1074 level I have noted on the chart – that means no intraday price moves below 1074. We would also like to see one real big rally day that pushes us up to one of the key retracement levels (38.2 % or 50% of the way we’ve fallen in the past two weeks).

What we are doing with client portfolios over the next couple of days is putting some stop losses in place to lock in some of the bounce gains. Its not time to look at adding to positions with the cash that we’ve generated from the stops that have hit over the past two weeks – that may come if the rally shows adequate strength on our indicators.

I’ll keep you informed as we move forward over the next couple of days, but I thought you might like to see what I’m watching to gauge this move.

For today’s trivia, I wanted to continue on with a follow-up question related to Sunday’s trivia. Those that emailed me were mostly correct with their answers to the name of the movie and the actress ( sorry, it wasn’t Susan Sarandon as one person emailed). I think maybe this was too easy, so I’ll try for something a bit more esoteric.

So here is goes: in this same movie, there is a pretty famous radio personality featured throughout. At one point, you even get to here him discuss banana popsicles. In the video below, a popular 70’s band sang a song about this radio personality (no fair cheating and watching the video before guessing). Who is the radio personality and what is the name of the 70’s band that sang his praises. There’s even a hint hidden in this blog post.

Have fun with the trivia, the video, and watching the action to see if the rally has legs.

Mark