The stock indexes rebounded today, with the S&P and Dow nearly recovering all of yesterday’s drop, and the QQQQ recovering all of the drop, and actually gaining a bit from the close of Monday. The volume on the Dow and S&P ETFs were a bit lighter than the volume on the down-move, however, the volume on the Q’s was a bit heavier. The volume relative to the past several weeks was very light on all the indexes, which is what one would expect in the last week of August. The market may have over-reacted to the FOMC minutes due to light holiday trading, and may have reacted back up by renewed perception of Bernanke acting “as needed” regarding the Fed rate. These markets are getting more and more difficult to deal with on the daily charts. The down momentum signal (last red dot on indicator zero line) was timely in catching the drop Tuesday, and options had a nice percentage gain for the day. Of course it would all have been taken back today if held, and there was little indication by the indicators on the daily charts to get out, other than possibly holding the first fib level as indicated in the comment yesterday. The rally in the Q’s resisted on the three day pivot (yellow dot) most of the day, but in the final hour or so, it succumbed to the bulls. With wide ranging bars, it is sometimes helpful to go to a shorter time frame. Below is a chart of the 60 minute QQQQ.
Above is the QQQQ showing both the normal day session, and the after hours session shown by the light colored bars. The indicator is the regression curve with the standard error bands. The ellipse shows the gap up, from the bottom of the bands to the top of the bands on the open the next morning. The day session started with a move up from the upper band, and a re-test mid-day, then a final push during the last hour. The 60 minute chart often can clear up a confusing pattern when the bars on the daily chart are wide ranging, and flipping direction every bar or two.
There is still little to say about gold. It was up a bit, but still right in the middle of a tight range. It is like a spring winding up, but it is not clear which way it wants to go.