It looks like the bulls are going to get a chance to see if they can take us out of this tight trading range that we’ve been in for what seems like forever. The jobless claims came in at 388,000. Anything under 400,000 is considered positive. So right now we’re looking at a higher opening. We have another important number coming out at 10:00 AM (EDT) – the Chicago PMI. Anything above 50 on that could be viewed as positive.

Larry

Larry,
Although there dosen't appear to be much chance of it happening, if the S&P closes above 1015 would you liquidate your short positions? One of the things I noticed in reading Market Wizards was that they generally were looking for a catalyst when shorting the market. If we need a catalyst to turn this market what do you see it being. By the way what was the catalyst that started the bust in 2000 or was there one?

Gary

Gary,

I would liquidate short positions in my trading account. I may even go long if it breaks out on volume. But I wouldn't touch my COT positions. It's an academic issue at this point. The bulls have had their good earnings reports, they've had their good employment numbers for two months in a row now, the PMI just came out at 55, another positive number. But at least as of this moment they still can't get anything going.

I don't remember a specific catalyst in 2000. I remember that it started to break in the Spring, went back and forth all summer with wild gyrations on both sides, and then finally collapsed in September. A bull market needs something to get it going. A bear market can fall on its own weight.

Larry

I know the day isn't over yet, but doesn't this look like a 2B reversal on the Dow?

Yes, indeed it does, Marc. Good observation.

Larry