Is a late day rally reason to buy?
Today’s late rally came as a surprise to some who were invested in the market to watch it drop 500 points only to see a late rebound pare most of the losses. What started as a relatively calm day on the markets quickly became a sad story with the Dow below 8000.
The late rally did do a bit to ensure confidence. Many people were looking for the common trend so far this week, and in the credit crunch, that is a quick move upward only to see the market taper off to triple digit losses. Instead today we saw people BUYING positions before the end of the day rather than selling. Investors were not just willing to hold overnight, but willing to hold positions over the weekend until Monday morning. One thing is for sure, the fact that investors are willing to buy before a weekend says a lot about the current price.
It’s hard to say whether the market is hitting a bottom, though after 8 days of losses I’d be willing to bet that Monday is worth a few points to the upside, especially if it carries the momentum that was present until the final minutes of today’s trading. An 8 day slide in the Dow Jones is rare, it hasn’t happened in years if ever and now the market as a whole just can’t keep up.
We might have a rally week this week if the Fed makes some much needed investments in the banking industry and the market can absorb the news without inciting panic.
