Nothing But Short Covering
All we had on Thursday was a short-covering rally, but many an advance is started by short-covering. Short-covering rallies usually last one to four trade days. The initial buying is generated by bears covering open short positions. This is usually over in the first four trading hours off the bottom. Price momentum players jump on while the bears are covering and then bargain hunters jump into the party, but once the momentum players start to take their profits, it is up to longer-term investors to step to the plate as prices retrace. If longer-term investors are not convinced of the potential for upside, then prices will just move lower and undercut the previous lows, which has been a regular occurance in this market.
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