What we witnessed today was a massive short covering rally in the equity markets. You’ve heard us say this before, bears make the best bulls, and that’s exactly what happend in the equity markets today.

The scramble to cover short positions in financial equities signaled an unwinding of the oil/equity spread.

Traders covered short equities and in turn liquidate long positions in crude exiting what had been a dream trade.

However, one day does not make a market, or a trend.

Also fueling the equity fire, was Donald Kohn of the Fed, hinting that the FED may cut interest rates again. Do you remember what happened last time the Fed cut rates?  The market rallied for a couple of days and then promptly tanked.

The message here is be careful what you wish for.

Here’s how I see it.

Equity Indexes = wide trading range

DOW: resistance 14,000  support 12,750
________________________

Crude Oil = wide trading range

Thursday and Friday should make for interesting trading. Look for continued volatility and markets that are skittish at best.

As always remain diversified and disciplined.

Here’s your sixth lesson in "The Secrets Of
Professional Floor Traders" mini email course.

Lesson 6 - "Point-and-Figure Charts"
presented by Adam Hewison
================================================================

This particular technique has been around for over one
hundred years. So you might say it has stood the test
of time. I first saw it used on the floor of The Chicago
Mercantile Exchange by some very successful traders.
Since then I have seen very few other traders using it
despite the fact that it is amazingly accurate.

This is a true gem of a lesson and not to be missed.

Because this lesson contains charts, it has been posted
here. 

Point-and-Figure Charts

All my best,

Brad Stafford