Thursday, June 15th, 2006 Today's rally leaves traders wondering whether this is the 'real deal' or just option expiration. It is hard to believe that a market can go from being on the verge of a crash to a 300-point rally in the Dow. What a difference a day makes.

Strong earnings from Bear Stearns and positive, but relatively mild, economic news put investors in the mood to buy. Even Bernake's talk of inflation was ignored today. This isn't a shock; the market has spent the last two weeks 'over' pricing in higher inflation and a slowing economy. The Fed Chair did tone it down a little bit. According to Mr. Bernanke, energy and commodity prices are keeping the core inflation rate high but inflation expectations have remained within historical ranges.

Despite two days of sturdy gains, some analysts continue to hold a bearish bias. In my opinion, a 200-point day in the Dow doesn't occur in a bearish market. It is highly possible that we will run into resistance near 11140, but I think that the overall direction will be higher.

Helpful Hints:

The 'summer rally' is typically not much of a rally at all. According to the Stock Trader's Almanac, the week after the June Triple-Witching the Dow has been down 14 of the last 16. June normally sees less than modest gains in the broad market, but the NASDAQ has performed slightly better averaging 1.6%. June ends the NASDAQ's best months.

Dow Recommendations Swing Trade - Safely on the sidelines.

Position Traders - We sold the June 107 puts for $500, these expired worthless today. Tomorrow we will be selling the July 104 put and the 115 call.

Option Traders - Yesterday, 5/14 we put on bull call spreads with naked legs. We bought the September 108 call, sold the 112 call and the 104 put for even money. This trade is already paying off nicely!!

Nasdaq Recommendations Swing Trade - Buy a September Nasdaq market on open.

'You try to be greedy when others are fearful, and fearful when others are greedy' - Warren Buffet