Follow through bullishness from last week gave the markets another jolt yesterday and all major indexes gained—although on continued low volume, which makes this rally suspect.
Strong earnings reports from Goldman Sachs and Intel last week seemed to keep the bullishness intact for the time being. Technically speaking, the S&P; 500 is now facing an important resistance level at 951. The next few days will be a test to see if there is enough follow through buying to break to the next higher level or if this marks a point where renewed selling will pull prices lower.
Helping the bullish cause today was an announcement from CIT that a deal with bondholders was made to keep the company afloat. At the same time, the U.S. index of leading indicators rose 0.7% in June supporting the view that the recession maybe nearing the end.
I sure won’t hold my breath and will keep my mostly defensive positions in order to be prepared for further volatility. This is not the time to try to be a hero when it comes to taking undue risk.