A combination of solid action and good news makes this market look a lot better. Even though Bear is gone, Lehman and Goldman are still chugging along, restoring some confidence in the troubled investment banks. Both reported earnings that beat estimates this morning and are up big in the pre-market as a result.
This in combination with the solid action yesterday (big gap lower was completely erased into the afternoon) has me thinking we could get a few days if not more to the upside.
Look at yesterday's spike in the VIX. It was exactly the type of move that I was looking for to get long off of. Everyone got too negative which let off a nice buy signal. Gaps lower in a downtrend continue to be a good opportunity to buy.
The XLF looks set to lead this morning. Their success, as I've pointed out in the past, is essential to the health of the overall market. The issues that surround the financials control the fed, sentiment, and thus market action. Keep an eye on their movements as they may lead the market up or down.
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