Bear Drilling

Friday's rally which began with about thirty-five minutes left in trading saved the bears from a lousy week. The bulls got drilled as short covering escalated into a rout after CNBC reported a possible workout might be announced early next week for Ambac Financial which holds about 500 billion in guarantees. As mentioned in the previous post, daily price action can be a trap and that works both ways with Friday's action. The bears got way to comfortable late, leaving the bulls to do hardly any lifting as the shorts scrambled. But the bulls will have to abide by the same rules in these ranges and be cautious of any action that does not lift the indexes to new monthly highs.