Wednesday, January 2, 2013

Fiscal Cliff Rally

House approved the 'fiscal cliff deal' and that sparked another overnight rally. Indices gapped up huge and maintained the gains. Even better, they closed near the highs of the day.

After two great days of gains (on high volume by the way), it's better to get a bit cautious and not take on more long positions. A pullback is imminent after indices ripped about 5% higher since Friday's after hours low. That huge rip happened in only 2 trading days! A rare occasion, especially since 2012...

But whatever you do, don't short this monster, because that's like playing with fire.

5m-charts SPY:

Daily charts DIA, SPY, QQQ and IWM:

Euro, oil, metals
The euro reversed at 1.33 again and is trading for a small loss.
But oil was up over 1%, gold less than 1% and copper + silver +2%.

They all retreated from the highs where as the indices finished at their highs of the day.

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