The rally that began Friday afternoon a week ago carried over into this week's trading. Stocks marched steadily higher helped immensely by the government bailout of Citigroup and commitment to purchase $600 billion of Freddie and Fanny mortgage-backed securities. This had the effect of driving down mortgage rates and providing hope for the housing market.
Gains were stunning considering they were obtained in a mere three and a half sessions. The Russell 2000 gained 16.4% while the Dow gained 9.7%. The S&P 500and the Nasdaq were in between with both showing double-digit gains. These gains were all the more surprising given the consistently bad economic data released during the week including bad home sales numbers and durable goods orders that were twice as bad as expected.
Against the backdrop of a suddenly resurgent market, we see the number of BUY signals increasing strongly. Here is the breakdown for this week:
- based on daily data, we have 90 BUY signals and only 3 SELL signals
- based on weekly data, we have 8 BUY signals and 4 SELL signals