Is This An Exhaustion Run Or A Major New Move Up?

Since I've got a little extra time today, let's do a little speculating about the short term. Above is a four week intraday chart on the S&P 500. We have what appears to be a micro double bottom or something similar. The upside target on this pattern would allow for the S&P and likely all other indices to fill the gaps created on the "dump" day. A day we were told China's market was down big as I recall. As an aside, it's funny we haven't heard anything out of China in the last few weeks. Did the lunacy of buying stocks on credit cards-Bloomberg report-disappear? Compartmentalization. That greatest of human abilities to persevere in the struggles of life. Not so great of an ability for investing.

Back to the U.S. market. I have seldom seen the kind of sustained ramming unleashed over the past week. Over eighty S&P points in a week. At this pace, the S&P would accumulate three quarters of a century of gains in a few months. Mostly on weak volume. This shove tells me there are a tremendous amount of people viewing the 500 point drop in the Dow as a buying opportunity. Attracted to dividend yields in finance stocks is a common view I hear. I'm going to expand upon this in coming posts. From panic to euphoria in a few weeks. Such is the world of volatility.

Similar patterns exist on other major indices. One could speculate this ramming as possible exhaustion. I've seen "insanity" readings of wrecklessness not seen in the past decade. This is happening at a time when the risk to world's economic future is higher than any time in the last few decades. Not that market participants can't become even more irrational. The precedence is overwhelming that they can and many times do as as witnessed by 2000's huge equity bubble. So, is there one more shove to close the gaps? The generally accepted view seems to be that the move on Wednesday was the start of a new upward run because of the lopsidedness of advancing to declining issues. Those notions are dubious given the focus of short term traders and electronic trading of today's market. It's usually a fool's game to attempt short term predictions about major market events but why not. It's a slow day. Now, I preface this with the statement that chart reading is not a science and chart patterns are not highly reliable predictors of future activity. But, there is somewhat of a self fulfilling aspect as many traders follow them and base their moves accordingly. Therefore, this is a little bit of Ouija board analysis with plausibility. Let's see if I can embarrass myself.