Late afternoon equities rally continues to support strategy for January with help from Treasuries

2010 may prove to be a strange year - especially if it plays according to our strategy! So far it's looking on track as equities found a low point this afternoon and rallied into the close. Despite being down with a cold, I was fairly active tweeting and able to track it fairly well. The wave count may be a wave 3 of 5 to push the rally higher for some more days into the middle of this month. If that's right, then today's lows will hold through that time, for "the last swing trade long" for this month. What helped today was not just about the dollar, but interest rates - so the TLT chart is my first one, below. With Treasuries up (apparently we can thank the Fed!), traders felt comfortable continuing to bid up equities. Tomorrow at 2 pm there's a Fed statement so we'll also see if that helps any intraday games.

Our strategy us to remain positive equities until they top out in a week or so. So far, so good. Notice the banks also rose - not a new high, so we'll just keep an eye there. And gold was sort of up but kinda stalling at the same time (bottom chart, after $BKX). I can't guarantee that gold won't rise with equities right now. But if the game is for low rates to stay in place for awhile, then gold may not be too hot right now.

Been thinking yen and euro should rise here, but only the yen did today, so no real fireworks on the dollar in that sense. Oil's rise is what surprised many and it's promising (or threatening) to break out higher - if it follows through, we should look for $91/92.

Meredith Whitney lowered her earnings estimate for GS but is still ahead of the Street. Besides, GS is still working on a last wave up to complete its big wave 1 (or whatever it turns out to be). That helped the financials (XLF) push over its own 50 DMA. The only question is whether it too can make a higher high, before the music stops after a week or so.

So if you're trading the continued rally party as we are, great! Just keep in mind that we're dancing increasingly close to the door. For now, 1132 needs to hold for the SPX. Dropping under 1114 would put out the flame but we're not expecting that - we're looking for 1140 and then above toward 1150 and maybe around 1160, before the music stops.