Finally, an impressive rally in the market. Not only did the indexes gap up in the morning, but added to those gains with a huge rally at the end of the day. Both the Dow and S&P 500 closed up over +10%. The ultra-inverse ETF’s took huge hits today. One of them, EEV, closed down nearly –40% today!

Today’s action in the Dow and S&P 500 put IBD’s Market Outlook back to “Confirmed Rally”.

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The reason IBD had their outlook in “Market in a Correction” is because the NASDAQ had made a lower low since its rally confirmation on the 16th. Today marks day 1 of a rally attempt for the NASDAQ.

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Although today’s action was impressive, and confirmed an IBD market rally, no technical levels were broken. We are still in a downtrend, and it will take some time for charts to build bases to build momentum from. There will be an announcement tomorrow from the Fed concerning interest rates, which should offer some volatility. I will sit on the sidelines, being cautiously optimistic. If we do enter a multiple week or month rally from here, there will be plenty of opportunities to make money. So I am being patient.

Trade Ideas for 10/29/08:

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Good luck and good trading!