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Coolhand's Market Analysis

The Bear Hunt Was a Success!

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It wasn't too long ago that the current market was acting very much like a bear. And it was global in nature with many charts rolling over and technical indicators suggesting more downside was in store.

But it was a bear trap. And a heavy duty one too.

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The S&P 500 hit a double bottom in mid-February and hardly looked back.

With global growth concerns painting a dire economic picture, central banks around the world finally stepped in to support their respective indexes. After all, those indexes are the most visible evidence that all is right with the world, right?

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Take a look at cumulative breadth on the NYSE since the market bottomed just about 3 weeks ago.

If you're a bear, this is a picture that leaves you in shock and awe. Once those printing presses got to work, the trap snapped shut and the bear was trapped.

Is the bull now alive and well?

I am not so sure. Economic growth takes a lot of time to get generated. In has to be encouraged and needs support. Printing money out of thin air will not produce economic prosperity. At least not for us 99 per-centers.

So how much further can the current rally go?

Take another look at the chart of the S&P 500 above and notice that price is not all that far from the 200 dma. That is a possible target that could prove to be a top of some importance.

At least that's what I would look for from here. The bears are starting to cover their shorts and there may not be many of them around should that index reach and perhaps even exceed that important average.

That's often the point when a reversal finally hits.

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Updated 03-06-2016 at 08:30 PM by coolhand

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