Mood Swings Back to Giddy

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"The mother of all bear rallies wafted to within easy distance Friday."

The mother of all bear rallies wafted to within easy distance on Friday of re-energizing a bull trend that had seemed unstoppable until last spring. Then, buyers who had driven the broad averages higher for 14 months at an unsustainable, 45-degree pitch turned, sending stocks into a 1000-point sine wave that for four months has defied easy categorization as either a consolidation or distribution. However, bulls will have a chance to take charge unambiguously Monday when stocks begin to trade, since it would take a mere 60-point rally, to 10921, by Tuesday's close to turn the Dow's daily chart decisively bullish. We should note that that wouldn't quite clinch the bullish case for the longer-term, however, since a 1,000-point rally to at least 11868 is needed.

Last week's dramatic liftoff was brought on by the usual suspects, including: 1) the virtual absence of sellers in a market that has been driven 99% by computer-trading and institutional prop desks; 2) a sufficient quantity of aggressively spun but, ultimately, meaningless "good" news to drive short-squeeze buying through key resistance; 3) a helping hand from opportunistic buying of U.S. index-futures in illiquid, overnight markets; and 4) a mood-driven window of opportunity for the talking-head world to interpret whatever news hit the tape as bullish.

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