Buyers Are Back in a Wilding Spree

Tuesday’s maniacal short-squeeze suggest stocks can move higher as long as interest rates are not rising sharply on a given day. Bonds were slightly weak and yields were up commensurately, but that evidently did not deter the wilding spree that pushed the Dow 548 points higher. The hourly chart (see inset) suggests buyers will encounter relatively little resistance between here and a shelf of supply near 26,400 created a week ago. We’ll make that our minimum upside objective for the near term, implying the rally could have another 600 points to go. This scenario preempts a bearish one I’d put out calling for a drop to 24,298, although I strongly doubt the rally will achieve new record highs. It depends mainly on interest rates, as I noted here yesterday, and the uptrend in yields looks like it has further to go.