Short Covering
Short covering has been the theme since the 9:00 home sales release. I was looking for the morning to be a sell-on-rally type situation — instead it was a buy-on-dip style trade.
Now that the damage has been done, where do we go from here? I still don’t think this rally has much muster. What I do think is happening is short covering in front of Friday’s Employment report. I went into today thinking this would happen Thursday. The trading above 1455 has been forced. Buyers and sellers are attempting to take control of the direction, but we have ended up meeting in the middle – currently 1457.50. My feeling is this move to the upside is done, and if we trade below 1453, it could lead to a complete retracement of the upmove. Therefore, I am looking to be a seller on any trades below this level for a run back to the 1446-1444 support level.
If the upmove stays together. I would look for 1465-1467 as the next upside target. Any trading above this level would suprise me.