In one day, we erased all of last week's losses and cleared the 50 dma before it had a chance to bend lower but, as you can see from Doug Short's chart, the 200 dma is already in decline and we have to do MUCH better than this to get back over that line and turn that frowning average upside down before we are able to say we're back on a long-term bullish path.
What we have so far is a 30-point, 2-day bounce on the S&P after a 16-day 105-point drop or, we could look at the post election day dip of 80 points over the previous 7 sessions and then 30 points back up is almost exactly that magical 40% retraces we'd be looking for and the short time-frame makes more sense that way.
Dave Fry's Dollar chart shows how close the inverse relationship between stocks and the Dollar has been this Summer and Fall and we finally got the Dollar back below the 81 line yesterday, so of course we are rallying. It's not about the one-day rally but about what sticks once the variables calm down – and that remains to be seen.
IN PROGRESS
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