Traders Lose Patience

In Wednesday's closing post we predicted that the trading community would trip over themselves in order to jockey for position for a potential relief rally next week. Indeed we are seeing exactly that. Overanxious Bulls exhibit the impatience of a recently paroled convict in a strip club. Our concern is now that some of the relief rally is happening prematurely. While we do believe that a massive short squeeze leading to serious buying is possible next week, we are cognizant of the fact that the risk/reward has deteriorated slightly due to today's rally.

Nonetheless, we are comfortable keeping our 65% exposure over the weekend assuming the stock market does not close too strong today. The solid performance of the Small Cap and Semiconductor sectors are heartening and demonstrate speculative juices are starting to flow.

Crude Oil selling off approximately $2.30 to $64.20 is clearly not hurting matters in the stock market. Should Hurricane Rita turn out to be less consequential than many are expecting, Crude Oil is vulnerable for serious downside potential. There is support around the $62.00 per barrel price point however, its recent run-up and double top formation is ominous for that commodity and healthy for the stock market.

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