Dead Cat Bounce...?

After yesterdays steep losses the market came out of the gate stronger. We tried to press the downside within the 1st hour and the major indices briefly dipped into negative territory. From there the market turned north and we finally closed off the highs but still in the green

The Dow closed + 46.43 points or + 0.56 %. The S&P did slightly better, closing with a plus of 9.15 points or 1.04 %.

Economically it was a quiet day. Weekly jobless claims came in higher as expected with new claims of 637k. Analysts had expected on average a claim number of 610k.

The weekly claims number always has been a volatile number. As such the fact that it was higher than expected is really not to significant. The bigger issues is that weekly claims are running more than 50 % higher than where we were a year ago. This high level is yet another strong reminder that the economy is shedding jobs at a pace which will make it tough to get out of the slump we are currently in.

Today's price action is what we like to call a Dead Cat Bounce. After yesterdays steep sell off we recovered but the recovery was low on volume and did not manage to erase prior losses.

Of course...as with everything in trading one only knows whether we are seeing a Dead Cat Bounce only after the market has made new lows. As such my classification of today's price action might ultimately proof to be incorrect. (in the event that prices continue their advance)

However...I would take a bet on being right and expect prices to head lower. I remain neutral stocks with a negative bias and for those of you who are still long puts...just hold onto them. Prices should work lower.

See you tomorrow,

Steve Benger