Not Necessarily the News
I am fond of saying, "It's rarely just one thing, but, whatever it is, it's never just the news." And that was the case Wednesday when the market shot up, seemingly out of nowhere, on talk of a deal in the works on the dreaded fiscal cliff. At least that was the perception -- that there was some major progress on the fiscal cliff issues -- which, on Wednesday, turned the market back up from better than a 100-point deficit in the Dow Jones Industrial Average in the first hour of trading. At the close, the Dow was higher by more than 100 and the intraday move was 220. But in case you think that it was just about the news (which it never is), let's take a closer look.
In the abbreviated Friday session after Thanksgiving, the market exploded higher and left a bunch of unfilled gaps. Those gaps were downside targets for a pullback. Though I was remiss in not citing those gaps in Tuesday's column, I did show the gaps in my charts and said that I was looking for further weakness over the near term that I would use to add to my positions. The idea, as usual, is that downside gaps represent unfinished business for the market, and once the gaps are filled, it generally makes sense to buy for the next bounce....775 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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