Rebound

daily07301.gifStock indexes rallied today. A dead cat bounce was expected, as the market was very oversold short term. Today I’ll focus on the QQQQ as it is the only index that still has some hope of an uptrend remaining intact. The SPY and IWM were up a bit more on a percentage basis, and DIA up a little less. So far the Qs are holding on support, at least how I define it, right on the regression curve, and short term momentum has turned back up. The 50% level of the high bar to the low bar sits around 49.30, where I drew the blue line. There isn’t really any resistance there, but sometimes the 50% levels are widely watched and become self-fullfilling areas. The upturn in momentum by itself is not enough of a signal to assume this correction is over. It is more likely, if there is any followthrough to today’s action, that a retest of the low will follow, and then perhaps a divergence could set up a better bottom longer term. There was a small micro-M diver on the 5 period double stochastic, marked with a red line in the middle sub-graph. With the oversold condition and some indication of momentum, at least temporarily turning up, and the support at the regression curve, I suspect there could be a tradable rally up a bit, but a retest of the lows, if that happens, will paint a better picture. The other indexes look much less encouraging. Gold was up a bit but not much changed with the indicators.

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