Signals are Mixed

The weak bounce yesterday was uninspiring and leaves much to be desired. It may be that that Santa rally turned out to be just a self fulfilling prophecy and not one that was led by legitimate end of the year factors such as fund mark ups. Making a bearish case it may be that traders sold early strength and we may find that the intermediate downtrend started this week will remain in effect until the QQQQ reaches its lower channel support as outlined in Tuesday's report. The bullish case, which we still believe has some merit, is that the market pulled back to intraday support with bullish divergences showing on various indicators and the late afternoon pullback is just another attempt to shake out weak longs before the real rally begins. Today should be interesting. (Hedging? Yes we are hedging. The signals are mixed here.)