AT40 = 27.5% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 48.3% of stocks are trading above their respective 200DMAs
VIX = 19.3 (drop of 22.9%)
Short-term Trading Call: bullish

PROLOGUE
Valentine’s Day, February 14th, was a great day in the stock market and a fantastic validation of my strategizing during the recent oversold periods. However, I was not able to complete a victory lap out of respect for and mourning over the latest mass shooting in the U.S., this time at a Parkland, Florida high school. This blog is of course about financial markets, but I would be remiss not to acknowledge this particular tragedy. Even as the homicide rate continues a decades long decline in America, the relentless occurrence of mass shootings seems obstructs any sense of comfort from the raw statistics.

Commentary
So maybe the stock market is not so scared about inflation and rising rates after all. The Consumer Price Index (CPI) report came in slightly hotter than “expected” and created an instant negative response in stock futures. The S&P 500 (SPY) gapped down in the morning and buyers stepped right in from there. Around 10am Eastern someone ignited the rocket under the market and that was all she wrote for the earlier negative sentiment. At the close, the S&P 500 (SPY) gained 1.3%, the NASDAQ gained 1.9%, and the PowerShares QQQ ETF (QQQ) gained 1.9%. Most importantly, both the NASDAQ and QQQ bullishly punched right through their respective 50-day moving averages (DMAs).

The S&P 500 (SPY) gapped down at the open and barely looked back as the bear trap was sprung. The gap fill and continued buying was a sign that the buyers were taking over control.

The S&P 500 (SPY) posted its highest close since day of the VIX’s record percentage gain. The 50DMA still looms overhead as resistance.

The NASDAQ plowed through 50DMA resistance for a 1.9% gain.

The PowerShares QQQ ETF (QQQ) rallied alongside the NASDAQ as it too shattered 50DMA resistance.

Given my bullish trading call, I used the morning’s dip to add to my call options on SPY. I decided I have sufficient hedging to protect enough of my backside in case sellers abruptly reappear to spoil the party. I was very tempted to sell my all my SPY call options at the close, but I held. I want to wait until at least a test of 50DMA resistance.