Just a day after an apparent failure of the nascent rally, the market took another gasp, reversing from a down open that undercut the lows of the previous two days to rally on increased volume on some “positive” bond insurer news.
Will it be sustainable or was this just a minor reprieve and/or end-of-month window dressing? We will see. End of day selling brought the close back into the week’s trading range (see chart, below).
Looking at the 6-month chart (below), we see a test of the August low… from the downside. All of this, and this post, are why I titled this post “This Will Be Interesting”!
Here’s what IBD had to say about it:
Given the market’s volatility since late December, you’d need to see bigger gains than Thursday’s to signal a fundamental shift in the market’s trend.
As noted in Thursday’s Big Picture, it’s almost a moot point even if the market did manage to assemble a follow-through session of powerful gains in heavier volume. The reason? There are virtually no stocks close to proper buying positions right now.
Instead, what we’re seeing is a lot of stocks that made big moves last year, broke down, then yoyoed back up. In many cases, those stocks look like they’re forming bearish head-and-shoulders and other topping patterns. They don’t resemble the types of bases that typically result in big gains.
PS/FYI: I’m pretty busy right now and won’t have time to give blow-by-blow updates. You’re on your own from here 🙂