Stock market holds on to its early gains

The stock market managed to hold on to all of its early gains, which is a lot better than losing them, but it is disappointing that the market did not manage to build on those early gains. The bulk of the gains had occurred when the initial trades had executed by 9:34 AM. The market was a little higher late in the morning, but then drifted down into the afternoon as cynics took that early selling exhaustion as an excuse to sell into the rally. Although the Dow was off the morning peak by 110 points just 14 minutes before the close, it managed to regain 70 of those points by the close. This suggests that the intraday decline was probably short-selling by day-traders who were forced to close out their shorts near the close as the bulk of the market gains held up throughout the day.

 

I still think a lot of the initial pop was due to short-covering, but that is common when the market turns up after a significant decline.

 

The key issue is to see how the market closes a week from today, after all the initial retail sales hype has burned off and market participants get back to trying to forecast where the economy and businesses will be in nine months, not simply reacting to the news du jour.

-- Jack Krupansky