Be Careful

4pm I told you there would be a rally today and we had it. I told you to watch Freeport Mc Moran FCX and we got a huge rally today. I told you oil looked to be firming. Oil rallied. All of those were mildly positive for the market.

While we had a strong rally, there are a couple things to think about:

First, technically the rally was mediocre. We rallied strongly into the early afternoon and then faded. That is not good for the bulls. We wanted to see a strong rally into the close.

Second, we had been in a dramatically oversold condition. A rally like this was bound to come. This is not some sort of capitulation bottom.

Third, the reason for this rally was kind of unclear. We had a poor jobs number from ADP and a beige book that said the economy is going to be bad for longer than we thought. Those are not reasons for a bull market.

Fourth, there are many more questions than answers out there. Strong markets rally from an area of perceived certainty. We simply are not there yet.

If anything, this was a good day to get short or day trade a long position. Remember, I started getting long the DIA a little while ago and I am bullish over the very long term. I just wanted to be the voice of caution here. Be careful and until next time, stay low risk..