This rebound has certainly been stronger than I expected. The extreme oversold conditions have now turned into extreme bought conditions and have been that way for a number of days. With that said, trying to short this advance has been suicide for many. One thing to note is that since the entire advance since March 2008 the 20 day moving average only crossed below the 50 day moving average one time and that was in July when we had the false head and shoulder pattern completing. When the cross happened the 50 day moving was still pointing up signaling that the cross would be a false. Now in early February and only the second time since March 2008 the 20 day moving average has crossed below the 50 day moving average although this time the 50 day is clearly moving south, in fact it started turning down 2 weeks prior to the cross. This cross certainly holds more weight than the cross back in July.
