I’m not going to read too much into this data yet, but what I see here is a series of lower lows and higher highs, and that is a good thing for the markets going forward. Still overall bearish on the markets until proven otherwise, but the market showed us something today when it rallied from the abyss.
Many of you know I was net short going into today looking for further pressure on the markets, but as the morning weakness was prevalent I noticed something in the 15 min chart of the Dow. Below you can see negative divergence between the Dow and the RSI indicating that the selling pressure was loosing steam. I ended up covering my shorts earlier than I should have, but being free of all positions enabled me to look at the market without any bias when I noticed this divergence.
In fact, during Wall St. lunch hour I tweeted that I think the lows during that hour would be in fact the lows of the day. I really have no time to do a full post and twitter’s ease of use is my preferred method of communication during market hours. For those of you that haven’t joined the bandwagon yet, the time is now. If there was a way to monetize twitter, I’m sure some bloggers would only use twitter because it’s so easy, fast, and convenient.
So where do we go now after today’s rally off the lows? I’m inclined to say we’ll rally for a few days before turning around, and I opened a few longs today to play that hunch accordingly. Remember it’s a 3 day weekend and Obama’s inauguration next week.