Good morning.
Nasdaq significantly outperformed other broad market indexes on Tuesday, presumably in anticipation of results from CSCO last night, which contained lukewarm news of the some good, some ok variety.
SPX, DOW and NYSE Composites formed inside days, at or near the test of the significant prior swing low. Traders will be looking for continuation of the bounce up today or fears will rise that a deeper decline lies ahead.
Should price move up against these indexes we will have to assume that the rally game is on. Clearly yesterday enthusiasm did exist, even on the "boring" NYSE composite, as evidenced by the surge in advancers and advancing volume. We should note that these surges are normally found in bottoming price action, however they are also found at the end of bounces before a resumption of selling.
The bottom line: if price continues to move up, we will assume that a valid test of bottom is in place. If price fails to head up and hold, we'll need to act accordingly. We'll update the site with thoughts on strategies today.
A note on Gold.
As discussed yesterday, the USD is at a juncture where it is testing a number of currencies. A minor pull back, but yet not a continuation failure of existing patterns in the USD, is giving rise to some price appreciation in the Gold contract this morning.
Near Tuesday's close we noted a number of gold stocks close higher, triggering the prior high of day setup that was discussed yesterday.
There's room for Gold to bounce; if you are stopped into a trade be sure that you move your stops to break even, at least, at the earliest possible opportunity to protect against a failing bounce.
Have a good day! /Mike
04.05.12 09:17 #