Spy vs. Spy

Manipulator vs. manipulator or the fix is in.

"The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," said SEC Chairman Christopher Cox in a statement.

"The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress."

Given the oversold conditions noted in the previous post a whale of a rebound rally is in progress. Though spectacular, it is only resolving the oversold condition of the last week and will eventually fail and attempt to retest the lows.

My immediate price objectives of 1150 in the SPX were made intraday yesterday. What occurs over the short term remains to be seen. Historically, this type of rebound after a spike reversal like yesterday's are followed by a sag after 3-10 days to retest the low.

However this is not always the case and one shouldn not discount the affects the FED and SEC intervention will have. The markets were very oversold and it's quite possible we could be starting a rally like the one which began in August 2007.

Quote source is MarketWatch