SHORT TERM RALLY?

The price action turned a bit bullish in the short term as the market rebounded off of its lows today. It managed to close the day very near the opening price. Had it closed above the opening price, I might have been a bit more bullish (in the short term). The market has already priced in a bad jobs report tomorrow. If the report is better than expected, it could trigger a nice short term rally (one or two days...if that). The rally off the lows today was probably due to a lot of short covering. This is a process where short sellers will buy back the stock to close out their bearish positions. With the market down for 11 days straight, it's normal for the traders to start taking some profits off the table...especially ahead of a long weekend. This could possibly continue into tomorrow. It is almost impossible to know how the market will trade tomorrow. I can see evidence for both a rally or a possible decline. The price action today would indicate a possible short term rally, but we are headed into a three day weekend. Traders might want to get out of their positions going into the long weekend...especially with all the bad news coming out lately. The rest of the world will be trading on Monday and this might make some traders nervous. Although I'm basically clueless about tomorrow's outlook, I'm very confident about my intermediate outlook...and possibly longer term outlook. The market is headed lower. If we do get a rally tomorrow, make sure you use it to get into your put option trades. In this environment, you can almost pick any stock you want and make money on a put option. I've shared the bearish patterns I've liked on AXP and AMZN. SPY, DIA, and QQQQ are also still great (and easy) trades. I think you can still make money getting in right here, but a rally tomorrow would probably create a better entry. I few weeks ago I talked about gold getting near a top. We might have received confirmation today. Gold sold off on very high volume. Most of the major gold indexes and ETF's broke below their 50 day MA. The danger is that the trends are still considered up. With the high volume today, I think that aggressive traders can assume that the trend reversal has started. If this is the top on the GLD, my downside target is the $102 area. The reward to risk is great right here if you want to take a chance. You could place a stop above the 12/03/09 high. One disclaimer for those that are new...I've been known to be a bit early on some of my calls. I'm usually right, but sometimes I'm a bit early. The cautious traders can wait for a bit more confirmation. An ideal entry for me would be a failed rally tomorrow up to the $119 area on the GLD. With a stop above the December 2009 high, the reward to risk would be fantastic. If I'm right on this call on the GLD, you guys will owe me a new Mercedes...an E350 Cabriolet please, or a CL600 Coupe (there is only a difference of $100,000 between the two). I want to get you guys making so much money that a comment like that could actually be serious...rather than a joke. I'll just retire from trading and live on the gifts you send my way. Have a great 4th of July weekend and be safe out there.