12/20/11：Shorts need to cover
Those who don't have long positons need to chase high to join the ride!
Close of yesterday Mon 12/19/11 was typical shake-out. If somebody was not so firm on long, it wasn't very wrong to get out long positions. But there might not be good reasons to keep short positions.
With the gap-up open today, which confirmed the shake-out of yesterday, one has to join the ride of long.
CSCO is very indicative for the current market. Thanksgiving pullback said CSCO consolidates at 50SMA at most on the ongoing uptrending. The day before yesterday, Fri 12/16/11, its fake intraday rally with long up-shadow caught a lot of chase-highs and volume doubled. Yesterday, Mon 12/19/11, it dropped below 50SMA and forced some entries of 12/16/11, which were short term trading, to cut loss and get out. Today, 12/20/11, it opened with gap-up and went over 50SMA right away. It means it's ready to explode for the new round!
That's to say the new up-swing just started and short term long positions should be held tightly without DT adjustment.
Reasons for predicting new up-swing cycle:
1, NDX had been consecutive 6 red bars before today (typical cheating candle pattern);
2, DJI, which is never as useful as NDX/SPX but is widely paid attention to, had been swing around 200SMA;
3, NDX filled up the gap @ 2225 (while the gap 2160-2210 has never been expected to fill, because it's a one day cheating candle on a special day);
4, Leaders like CSCO have been performing shake-out;
5, Second tier leaders such as SBUX were strong during the correction in the past trading days.
That SBUX for example made new 52-week high today etc. can be confirmation to new up-swing cycle. Of couse, it happened almost four hours later.