by Rick Ackerman, Rick Ackerman.com:
Although our technically derived target for the Dow is still a very bullish 16800, we wrote here recently that we were keeping one foot out the fire escape. Given yesterday’s display of bravado on Wall Street, however, we’ve now put the other foot out as well. After being down 116 points, the Industrial Average rallied nearly 200 points to end the day 80 points higher, at 15040. We had anticipated the initial weakness with a bearish forecast for Thursday of a 15-point drop in the E-Mini S&P futures. This equates to a Dow fall of about 120 points. At the lows, which occurred midway through the session, both came close to hitting their respective targets. Although the rebound therefore came as no surprise, the relentlessness of it did. After bottoming, the broad averages ratcheted steadily higher for the remainder of the session, strongly suggesting with each new upthrust and shallow pullback that the rally was being driven solely by short covering.
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