October 28 - Market Commentary

Today was definitely and interesting day. Finally after an explosive rally fueled by better than expected bank earnings and other economic data, we have come to another pullback. But what now???

Like the pull back in early October will this be followed by another raging rally? or is this the down turn some have been waiting for?



Today we broke the 50 day simple moving average to the down side and closed below it, ending the day down almost 2%. So far the rally has had all the technical indicators on its side, but I believe a breach of support will bring a lot of technical traders to the realization that this market is over-bought and in that sense a pullback to lower levels will become a self-fulfilling prophecy.

I will look for follow through tomorrow. The bottom on these pullbacks has always contained a day of short trading ranges, followed by the upswing thereafter (reference above chart).