Short Term Bounce?

Sunday evening and the market is having trouble figuring out what to do for Monday morning.  Monday’s generally tend to be up days and tomorrow may not be an exception.  We have seen a bit of a bounce in the past two days of trading so we need to watch for a good opportunity to add to our short positions or sell into that strength.

Without good information that the market will deliver Monday, I am not sure how high this rally can bounce.  The futures are showing no movement in either direction tonight so I don’t think anyone else has much idea what’s going on tomorrow either.  We do know that the market is oversold in the near term based on the very negative numbers it generated last week.  More importantly, the market is giving you another opportunity to sell into some strength.  We think of it as a little gift from Mr. Market.

We hope you have had a chance to look at some of the free material over at the web site we mentioned the other day, elliottwave.com.  They seem to think the rally will carry the Dow back up near the 10,400 area but also say that if we see it below last week’s low of 10,156 then we should consider the next leg down to be under way.  

The two web sites, elliottwave in their Short Term Update and true contrarian, are both suggesting that bonds look to be ready to have a short term bounce.  We have noticed the 10 year treasury is at a relative high rate of near 4.5%.  We are considering taking advice from the three of us and purchasing Treasury bonds or funds that invest in Treasury securities.  The ETF, Exchange Traded Fund, that concentrates on Treasuries is TLT and we think it may have a 5% bounce in it.  It closed at 90.23 on Friday and could rally back near 95.  

Both of these websites offer additional information and are especially aligned with the way we think right now.  For their perspective please use the links provided in the blog, one at the left for the True Contrarian and the other one in the text of the October 12th post.  The elliotwave Short Term Update was posted on Friday evening and another one will be posted Monday evening.  Their free posts are only available until Wednesday afternoon so take advantage of that offer.  We recommend the October Financial Forecast as well as the Short Term Update.

Dow Industrials:   10,287.34   +70.75
RYVNX:  22.24