The End of Month, Short-Covering, ‘Get Out of Cash Now’ Rally
Yesterday was a mad scramble for the world to cover the massive short positions built up over the past two months, along with the long only fund managers needing to get out of cash and into anything (literally). There will likely be follow-through, especially as the upward month-end bias is in place. But the market is now extremely overbought and a pause is due.
Whether or not this is the beginning of a longer term move higher is unknown because, in reality, 2011 has turned into one large trading range. The world though is flush with currency and it has to go somewhere. The stock market (and possibly real estate) would be the likely places from here.
The above is from Larry Connors’ Daily Battle Plan.
To learn more about the Daily Battle Plan, click here for more information.
Larry Connors is founder of TradingMarkets.com