After the ripping rally midday Wednesday the ES made it back to the high 990s and looks like it wants to go a bit higher. The dollar got hammered pretty good on the back of the oil rally and rumors of a second stimulus in the works. We are still down on the week however and I would take the bounce back with a grain of salt. Everyone got too bearish too fast at the open on Wed after the media blew up the fact that China imploded AGAIN overnight. It is this sort of mass sentiment that is very dangerous in the markets and you should always take the opposite side of. So we gapped down 9 ES points and rallied to fill the gap.
Today's rally was led by commodities and lacked leadership from the three groups that matter; banks, brokers, and semis. When a market rallies without these industries I am cautious.
Overall there is still something wacky about this bounce back this week to me that I cannot trust fully but then again if it we see the Euro rally back over 1.43 then stocks will catch a bid into the weekend. For some reason however, I still think the market wants to test the 970 area soon. If I'm wrong, then I'm wrong but I think it pays to be prudent here as we are in mid August and strange things can and will happen during options expiration weeks.