The announcement out of the EU that it would ease austerity measures, promote a stimulus program and allow countries to shift bad-bank debt burdens onto the European Stability Mechanism was exactly the news we were waiting for.
As I commented last week, the bearishness appeared over done, and the market "felt" like it wanted to move higher.
Friday’s close above the 50-day moving average on the S&P 500 is extremely bullish, and suggests that the S&P 500 will make an attempt at new high territory.
Europe's actions must be viewed as stimulative, and this is why we saw such a powerful rally. The bears who were betting on an economic Armageddon got caught short and had to cover. There were massive moves higher in Gold, Copper and Oil, all of which had been heavily shorted of late.
Stocks look higher. Enjoy the rally, but as we start getting up to new high territory I'd be looking to sell into that strength.
Remember: We have Q2 earnings announcements just a week and half away, and I think they are going to be on the soft side. I would view this up move as a trading rally rather than the beginning of a brand new bull market.
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