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Markets Exhaust

Today was a day that many traders have anticipated for the last 4 weeks or so. The sentiment on wall street had gone from doom and gloom right back to the raging bull of the late 199o’s at the flip of a switch. Truly this is what made the trading over the last few weeks somewhat confusing. We go from a point in which every day we had either Obama, Bernake, or Geithner on TV trying to make the country feel secure, yet all they did was create more panic to a point where bad news was ignored and the market raged higher.

By 8am this morning the markets had a feeling of exhaustion, a point in which a stock has no place to go but to reverse.  This morning Bank of America was up over $2 premarket after it had just made a run from $3 – $13 in a matter of weeks. It just felt like the right time to start testing the short side of the market. The shorts have been getting beaten up for weeks. Anytime a short trade was placed it was back in your face right away. They just did not work!  Today that changed. It was the first time that shorts were following through and each and every rally was an opportunity to short again.  Bank of America still remained one of the stronger stocks, yet at one point was down to $12.75 after trading at $15.10 in the premarket.

The stress tests were released this evening and it seems as if there were no major surprises , as there were many leaks this week.  So where do we go from here?  Good question!  Remember, we are still above the 200MA of a good portion of the S and P 500 stocks. This means the market still remains strong and today was just a pullback in an uptrend. There will be many opportunities to short over the next few weeks as the market takes a breathe from this historic upmove. However, you must be diligent to keep tight stops and recognize that we still have the ability to move higher!

As always please email us at info@keystonetradinggroup if you have any questions about trading


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