October 5, 2011
Uncategorized
By Geoff Bysshe
I the final 30 minutes of the day stocks across the board where trading on volume that was high even by current measures. Most of the highly volatile stocks closed on there highs, and many on high volume for the day.
It was an impressive day for the bulls almost right from the start. The gap to new lows continued lower for the first 30 minutes, but then the bulls took over and brought all but the Dow in back into the prior day's range. When the bears pushed back, pushing the Q's all the way to new lows for the day, the bulls found some reason to ignite the market on high volume to new highs of the day in the last 30 minutes of the day.
In the end, the daily charts have an impressive rejection of the new 2 months lows that were reached today, yesterday or both depending on the index. One exception to hitting new lows was the Q's which now look like a nice divergence at the lows.
The volume was greater than yesterday and the average so it is a decent looking reversal. In all 4 markets, the most impressive reversal came in the IWM's which closed the weakest yesterday, and the strongest today relative to yesterday's range. In fact, the IWM's are the only index that will have a positive pivot stack on Wednesday.
The up day created the opportunity for some long set-ups, but aside from the positive pivot stack in the IWM's, and the potential reversal pattern of taking out support and closing above it, the bearish trend is still firmly in place. Therefore, if there is a good opportunity to sell strength on Wednesday it should be considered.
As a result of the daily pattern I'd consider the following daily points as important support in addition to the prior day's pivots and range if the market moves lower.
QQQ: The low of Monday 51.11
SPY: The 9/22 swing low of 111.30, the low of Monday 109.81
IWM: The 9/22 low of 63.49
DIA: The low of Monday 106.30, the 9/22 swing low of 105.72
If the markets can hold above theses levels over the next several days, we may have a bottom.
Make sure you trade by the rules, not by what you think you see in the charts.