Editor's Note:

The U.S. market has staged an impressive rebound. The S&P 500 index is up +6.4% from its Monday lows (near 1136). The small cap Russell 2000 index is up +7.3% from its Monday lows (near 665).

Today's S&P 500 breakout past 1205 is certainly bullish but stocks look short-term overbought. Of course that doesn't mean they can't get more overbought. It will be interesting to see if stocks retreat lower on Friday like they have done the past two weeks.

Next week will be interesting. Will investors continue to bid up stocks in anticipation of the Fed's announcement the middle of next week? What if the Federal Reserve disappoints with not enough stimulus?

We are not adding any new trades tonight. Personally, if you have gains I would be tempted to take money off the table here. The S&P 500 is still trading inside the bear-flag pattern.

Chart of the S&P 500 index:

NOTE: Yesterday I mentioned using a straddle or a strangle on RIMM to profit from any post-earnings volatility. Tonight RIMM reported earnings that missed estimates and revenues. The stock is down -18% in afterhours trading.

- James