It was time for a good oversold short squeeze and we got it today. Wednesday's large selloff took the McClellan Oscillator to sub -60 readings; the VIX nearly broached the fear level of 30; and, daily RSIs in some sectors also pushed below 30 meaning more oversold conditions.
The initial stimulus for today's rally came from FedEx which actually reported results that missed, but gave a cautiously positive forecast. The stock rallied 5% on the news initially.
Jobless Claims also fell just matching expectations; headline CPI was up .5% (I refuse to report the bogus "core" rate); Industrial Production was a large miss lower (-.1% vs. +.5%); Leading Indicators missed expectations (.8% vs 1% expected) but the Philly Fed knocked the cover off the ball with a reading of 43.4 vs 28 expected. Little noticed by bulls was the huge rise in prices that will surely be noted in the next PPI report.
The Fed tossed-in another $7B in
to grease the trading desks and "wink-wink" they know what they're supposed to do with that cash.
As to problems with Japan and MENA, bulls just put those aside for today.
Also options expiration is at hand and can add significantly to volatility. And, what the hell, it is St. Patrick's Day after all! So let's put our worries aside and rally.
Volume was still high but about 45% lower than Wednesday. Breadth was positive but moderately so.
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