Was Friday's rally for real?

Well it would appear that the market got a real boost from Bernanke's comments about doing everything it can to help the economy. Let's look at the facts from Friday's session. A/D lines on both the NYSE and Nasdaq were at extremely bullish levels. Breadth on both exchanges were above 90% whilst cumulative ticks finished at a healthy 50,000 ticks after starting off down -10,000. Volume was quite heavy finishing well above the 30 day median average.

So what do I think of the market here? I think Friday's session was a bit of a knee jerk reaction to the Fed's comments. I don't think anyone want's to get their pants pulled down in case some unexpected new measure is announced so it was a case of a lot of traders covering their positions and probably a few new longs getting into the market. The danger here for the bulls is that the market fails to make any sort of meaningful bounce. A quick failure here would lead to a lot of disappointment and that could lead to a lot of long positions being dumped quickly. That would be perfect for new shorts and so we could see heightened volatility (on the way down). We shall see.

I did initiate a smallish OEX Put BWB with 480/475/465 strikes but now after thinking through the structure of the market above, I'm not so confident as if we fail to rally here then we could move lower within a short space of time so I need to monitor this trade closely.

The update on the same trade but that expired last week was that it was closed for $1.00 credit. It may have done a lot better had Ben not opened his mouth but that's trading for you.