Two Days

It is just 2 days. No big deal We are in a bear market and bear market rallies can be face rippers. Everyone is reminding you of that. They may all be right. Balance sheet unwind, short term rates heading higher, tariffs, the environment fits. Yet there are these two days. One where the market is up 5%. The second a little less than 1% but with a dramatic 90 point intraday rally in the S&P 500. Are they important?

The chart above of the S&P 500 ETF explodes these two days into 15 minute intervals. From here there are some interesting aspects to these days. First look at the boxes. Each day ended with a strong run higher. On Wednesday it started at 2:30 and printed 6 white (up) candles in a row to end the day at the high. On Thursday it started 15 minutes earlier and printed 7 consecutive white candles, also finishing at the high.

It is said that retail plays at the open where the pros trade at the close. This is pro buying. Both days ended with the price outside of the Bollinger Bands and at overbought momentum levels. What was the reaction after the first day? A pullback inside and reset of momentum, but price action and indicators remained in bullish ranges.

This may yet turn out to be just a bear flag building. An opportunity to tee up new shorts. But remember that every trend has to start with just two days.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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