Today’s move does not come as a surprise after a five day slide. Whether or not this turns into a new rally is another question. A bit of good news from the economic front was the ADP private payrolls jumped more than expected. The morning part of the session was quite volatile, but as the release of the Fed minutes neared the market tightened up. After the release of the minutes the market was able to hang tough and pushed into the highs of the session. Volume was lower on the session, but about average a good sign for the bounce. Whether or not this is real remains to be seen. For now, we are operating in a neutral mode and allowing the market to prove itself.
Today wasn’t an overwhelming great day. Small caps lagged for much of the session, but they have been laggards for quite some time. We did clear off some oversold conditions. However, we need to see more stocks break out from well formed patterns. We haven’t had the proper corrections to build bases so our pool of stocks as dwindled. As we proceed further we need to see stocks busting free from sound bases.
The move off the December lows was fast and furious. As the S&P 500 fell about 5% buyers rushed in and pushed the market back to new highs. Volume was not overly impressive nor was the moves in plenty of stocks. Energy lagged, but given where energy prices were going at the time it was not a surprise. At this point, many of the cocky dip buyers will be happy with their decision to get long. There are certain day trading opportunities our chat room will identify for the afternoon, but we are not seeing great opportunities on the long side. This does not mean longer term holdings disappear. They could very well be setting up now. We just need to be ready for whatever the market is willing to give up.
Just how long this bounce will last is anyone’s guess. We are going to stock with our rules based system and push forward.
