The Squeeze is On

The squeeze is on and its a perfect time to do it.  Light volume today coupled with options expiration week.  Now that the impulsive part of the move down is over, it's time for a sharp snap back retracement to flush the shorts out.  It's also a great time to take back some of the profits that have been made from buying put options.  The Dow Jones was up 936 points, over 10% with the Nasdaq and S&P following a similar return.  The rubber band was stretched beyond belief and a relief rally is in order.

Was today the initiation of a new bull market or the end of the bear market?  I highly doubt that; however, as I suggested on Thursday, a monster rally should be in full force.  This could be in the area of 30% to 35% before it's all said and done with.  There is strong technical resistance in the 10300 area which also represents the September 30 lows, which, when broken, caused the collapse.  This also represents the 61.8% retracement from the August highs to Friday's lows.  Depending on how we run up to this area, I will look to possibly remove my long position in this zone. 

The market gapped higher this morning and never looked back.  There was strong buying all day today and by the way this market closed, we are heading higher before a pullback of any effect takes place.  I do believe that a retest of some sort will come into play in the coming weeks, potentially filling today's gap or setting a marginal new low in this market.  I am no elliot wave expert, but the sharp move down that we saw looked like a wave 3 down from the highs of last year, if we are in a wave 4 up, wave 5 should test the lows, if not take them out.  If it will happen, it will happen fast.  October is a bear killer and I believe that this time around will be no different.  If we don't see a retest of the lows by the end of next week, we probably won't get one for a few months.  Enjoy the ride up.