Tuesday, August 23, 2011 4:55 PM – Market Up 3% – 5%

Here are the #s:
S&P 500 3.43%
DJIA 3%
Nasdaq 4.3%
Sml Stks 4.9%

Gold -3.75%

I don’t trust this rally in stocks today. It will have to prove itself by continuing significantly higher. A sharp one-day 5% rally is not uncommon in a bear market. Usually, it is a small rally that gets short sellers buying in order to cover their losses from betting against stocks. That pushes things up sharply, especially in these days of highly computerized trading.

We have had two similar one-day rallies in the last 3 weeks. One sold back down the next day while the other went slightly higher over 3 succeeding days before losing all its gains.