The S&P 500 Index added 23.7 points, closed at 1160.75. Stocks raced higher right out of the gate this morning, as a surprise rate cut from the Bank of Japan and better-than-expected services data ignited a broad rally. The markets are feeling reassured after Japan's move to ease monetary policy and the fact that the service sector, which accounts for 90% of our economic activity, is stronger than we were expecting.
Technically, it is bullish that 1150 resistance is broken with above average volume. However, another resistance 1160, 1175 will stop the next rally. The wild card is the employment report on coming Friday. Personally, I think of two scenarios will happen. Firstly, market will have another gap up on Friday if the employment report is very bullish. Secondly, the market will gap down if the report is bearish.
The short term market top may happen on coming Thursday or Friday. You may want to short this market with extreme overbought mode at 5, 15 and 60 minutes charts if market gap up on Friday and the resistances 1160 and 1175 act as a cover. On the other hand if the market gap down, you may want to wait for the first rebound before placing your short order.
BE CAUTIOUS BEFORE YOU SHORT THE CURRENT MARKET BECAUSE the track record of the mid term election rally is very strong in that only one has been down in the 34 years [INDU] since 1913 for the 5-month period starting at 9/30.
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