Will The Double Bottom Hold?

As the chart below shows, the S&P 500 so far has put in a successful double bottom.  Typically, technicians and traders look at this very carefully.  With the equity markets oversold on a short-term basis, the Fed adding more liquidity, and a double bottom on many stocks and indices, more up days may be upon us.

I think this will be a tradeable rally for the next days and perhaps few weeks.  My problem is two fold.  First, we haven’t had the complete washout (yet).  Secondly, it’s too convenient for the markets to double bottom and then be off to the races.

But, as I’ve been saying on the air and in this blog, you have to stay flexible.  All it takes is some good fundamental news, Fed news, whatever and foreign money could come pouring in to support stock prices.  Therefore, you have to trade this market to be successful and don’t let your beliefs about what should be happening dictate your trades.  Just because I think there needs to be a washout where fear really spikes, that doesn’t mean there can’t be a big rally. 

In fact, I covered some shorts today.