The markets are surging higher on the back of pure and simple technical analysis. While the media will point to a lowering of fear in Europe, the fact is the bottom in the market was in two days ago. On Tuesday the Dow Jones Industrial Average staged a 700 point reversal. Then Wednesday the Dow dropped 500 points. Investors, traders and media outlets freaked out, running scared. However, smart technicians realized the markets, having pulled back 500 points, were still inside the 700 point rally. As long as that pivot low from Tuesday did not get taken out, the bottom was in.
On the SPDR S&P 500 ETF (NYSE:SPY), this pivot low was $110.27. On Tuesday, the SPY ran from that low to a high of $117.64. Yesterday, the SPY pulled back to close at $112.29. As long as the $110.27 low holds, that is a bottom signal and any pull back was and is a buying opportunity. This is what I stated yesterday, even when the Dow Jones Industrial Average was down 500 points. I continue to hold to it today in this great rally. Ignore the media and fear, profit using the charts and proprietary technical methodology. Yesterday was a classic day known to flush the little guy out of the market. It worked and now the markets can turn higher in the short term.
Today, the leaders are wide spread. Cisco Systems, Inc. (NASDAQ:CSCO) reported great quarterly results and the stock is shooting higher, currently trading at $15.96, +2.23 (+16.25%). Banks are rallying as well which is important. The banks have been crushed of late due to European debt woes. Goldman Sachs Group, Inc. (NYSE:GS) is trading at $115.47, +5.13 (+4.65%).