Jeff DeGraaf, ISI head of technical analysis says Tuesday’s rally is far more credible than the past rally a couple weeks ago.
“This is the 6th best rally in the S&P since 1925,” he says. “If you look at volume and breadth it makes me more bullish than I’ve been in quite a while.”
With sentiment so bearish, “we have a condition that would set itself up for some type of mean reversion probably to 1100,” he says.
Short assets vs. assets shows that there is far more money betting the market down than up, and today's rally is more reliable than the most recent one.
As a result, “the best market strategy right now is a call spread on the S&P selling the upside around 1100,” he concludes.
What's the bottom line? Sell the rip!
To see DeGraaf’s entire analysis please watch the video.
