Whenever you have back to back up days like today and last Thursday, you always feel like you have a lot to say.   The truth is, action today should not surprise us given the rally thesis we were envisioning since last Monday.   So have things improved a lot since a week ago?   Yes and No!    The trading psychology and sentiment have definitely shifted somewhat.    For now, there is cause to buy on dip!  The reason why we are saying this is that we may have just witnessed the bottom action of financial stocks last week.    The capital market, as we have been saying all along, is the most important pillar of our and world's economy.    Just imagine without the efficient flow of money in the system, none of the business would even function properly. 

Just to recap, we were near a meltdown in the financial market one week ago and it was saved by none other than the Fed.    Dislike them or not, Fed officials are the ones who stepped up to the plate when the time called for them.    The rally last few days is definitely caused by the renewed confidence in our financial sector.     Things may not have changed a whole lot economic wise, but an intact financial system will give us enough confidence to look forward to see through a recovery in growth or to avoid a deeper recession.

Slow down, Cowboy!.   Right now, we are hoping that this rally would just slow down a bit.   The faster it goes to the next major resistance point of 12700 on Dow and 1380 on SPX, the more likely we would just bounce off and retreat.     The slower and more consolidation this market gets before it gets to those levels, the more likelihood we can at least give it a good try to break those levels.       Judging by the pace of trading in recent weeks, we don't know if what we ask(consolidation) is even possible.     However, with the financial woe out of the way for now, we are just hoping any dips next little while won't turn into a nasty sell off.

Believe it or not, in the next couple of weeks, we are into the pre-announcement period.    This means that we are near the next quarters earning period again.    Time sure flies!     Just to warm things up, we have RIMM and MON reporting on Apr. 2nd and we'd for sure keep our eyes on it.     In our opinion, last week's  bottom may be the short term trading  bottom for the next little while.    We still can break lower but this market needs real confirmation of recession before we can head much lower.     One possible scenario is that we'd have a string of negative economic reports and as well as a dismal second quarter earning report from major players to send this market into a tailspin.    Of course, that scenario won't develop right away and we'd still have at least till May to get some good potential long side action to play within the next few weeks.

Now onto some action...if you set up a copy of DJIM's watchlist this weekend, you definitely got some green action to sell into nicely!.  Besides the JPM-BSC noise, we definitely got a "pleasant" surprise from the ECO data (housing) that fit perfectly for a follow through from Thursday..

Most of the plays on our watchlist did well today with some notable strength from steel X, solars and shipper sector.     We are still a little wary of the agri/chem sector today as it looks like they aren't done correcting.    We are also a little cautious on the oil/gold/base metal as well as these are better to buy on dips as oppose to chase on strength.     The group that stands out the most today is the technology sector.    Everything from AAPL, RIMM, to BIDU and ISRG GRMN all performed well.    We think these types may get some good momentum into their earnings dates.

Bottom line, we are praying that this rally slows down and give us some better entry point to reload on.    We are in the full buy on dip mode with the above sectors until something dramatic happens.