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Tuesday, February 2, 2010

Bulls and Bears Face Off

The bulls managed to stop the bleeding in Monday's session, lifting stocks and the major indexes from deeply oversold (short-term) levels to close at the highs of the day and back above support that had been cracked on Friday. Commodities-related stocks led the way, with precious metals in particular scoring strong gains as gold and many of the miners turned up off key levels. The move, at this point, is still tentative and needs to be monitored for signs of meaningful follow-through action in the days ahead.

The recent sell-off inflicted considerable technical damage to most charts and Monday's bounce was both anticipated and needed to start to burn off some oversold conditions. It's premature to read anything more into it, and we'll need to gauge the action as near-by areas of resistance are tested.

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