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Is Santa Claus Rally undergo?

As I wrote yesterday, we could break down thru the support or bounce back. The market was oversold and there were no significant negative news to push it lower, however because of Europe, there still was a risk of going lower.

It seems like we are bouncing instead. The SPX surged 2% up at opening and it looks like it will be marching higher. Will this be the rebound? If so, we will see a Santa Claus rally.

But more important than Santa Claus rally would be that the market is making a new higher low. If the market creates a new higher low, we may expect it going back up to 200 day MA and most likely break it above and create a new higher high. That would signal that we are in a new bullish trend.

I am going to take that risk and this morning I reversed my bearish trade in SPY into a bullish by buying calls. Let’s see what Mr. Market has ready for us.

Happy Trading and Merry Christmas!!!

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