After the gap up open,bulls continued to push higher all day on positive Europe bailout news and oversold conditions post the Labor Day holiday. INTC also helped the semiconductor sector by reaffirming guidance. Breadth was impressive but the volume continues to be low. Given how oversold we were coming in and the recent support holding, there could be still some upside left. However, we are still in the early stages of a vicious downtrend and any overbought rallies may have the plug pulled at any moment, as we have experienced with the recent rallies that often fell 10-20 points short of expectation. In addition, we still have recent high beta stocks holding relatively well and the next wave of selling could hit them hard.
There are certainly no shortages of catalysts to move the market. Tonight we will also get a glimpse of the China inflation number. Tomorrow morning’s jobless claim will be interesting after a dismal jobs report last week. After that all eyes will be on Obama’s plan after the market close and Bernanke’s speech mid-day. With the Obama job plan well leaked in advance, how much of it is already priced in? And will it have any bite with the gridlocked Congress?
