If you saw in my previous intraday comment, I watched as price fell to the centerline and bounced aggressively from there. Unfortunately I did not act on the reaction and spent the rest of the day watching price rocket up. In fact, from this bottom to the close … the Russell 2000 gained 2.6%, even though for the day it closed down 0.20%. An amazing move.
Today was a very strong move, where all indexes fell pretty hard in the morning hours and then spent the rest of the day climbing. This sends a loud signal that the buyers stepped in and did not want the price to fall any lower.
I think there were a lot of traders sitting on the sidelines over the past week waiting for a good pullback to be able to get in at a cheaper price and today offered that.
Volume was very strong today, which further confirms the bullish move.
Today was in fact the first day in roughly a week where I felt good about the next few weeks … we might go up from here after all. I would like to see a gap open to push me over to the bullish side.
My end of day analysis is still mixed, although leaning more toward the bullish side than previous.
A few things that bother me …
I have a proprietary indicator which I have coined the “fear index” that is VERY accurate at predicting future movement usually 1 – 3 days in advance and it is not confirming the bullish movement. In fact, it pushed lower today while prices pushed higher … definitely troubling to me.
The vix again closed up today … which usually coincides with a falling market. What this is telling me is that in the options markets traders are preparing for a down move even though one has not appeared. These traders could be wrong, but this anomaly usually doesn’t occur.
The Russell and Nasdaq had a strong move, but were not able to make a new high today. So although we did not have damage, we did not technically make progress. The SP-500 did make a new high, but all indexes ideally need to confirm the move.
An opening gap tomorrow OR strong move intraday should remove my concerns … but otherwise we stay firmly entrenched in our trading range making little progress over the past month.