Mission Accomplished:
We discussed yesterday the possibility of a bullish engulfing week, depending on Fridays CLOSE. That was realized even with the late selloff, but it does not mean we are out of the woods. I remain constructive to the long side, but the vast majority of traditional breakouts, along with confirmed candlestick patterns are often retested for their validity. That means we could still witness a 5-6% pullback into the WEEKLY engulfing candle, which would be into the middle of the formation, which equates with the rising 200 day SMA, and the very round 7000 figure. Ranges are still expanded obviously which means the moves will be volatile, but again I think we have moved to an environment where it makes sense buying the dips. The WEEKLY gain of more than 9%, was easily the best advance in more than 5 years, and the fact that it CLOSED in the upper half of the range was more impressive. I have been asked plenty this week if the gains are artificial via the Feds action. To which my response is, does it really matter. The reason is not necessary. If you make a 20% gain on a move, whether it is short covering, plain generic buying, algo driven, or Fed induced, it all counts the same.