Another Turn-around Tuesday

spy0729.pngToday was yet another turn-around Tuesday. I’m not sure why the action on Monday can often get reversed on Tuesday. When I was a stockbroker many years ago, we often joked about the turn-around Tuesday effect. It seemed that if Monday was a big day, we could almost bet on the following day reversing whatever happened. Maybe pent up demand or supply from weekend analysis, and with the markets being closed, would at times cause an exaggerated move on a Monday, and then local profit taking would start the momentum turning the other way the following day, with momentum sometimes gaining enough to cause a complete reversal. It is a phenomenon that has been around for a very long time, although not occurring often enough to depend on. Today the consensus seems to be that the worst for the economy and the markets is over. That will probably be revised many times before the worst is actually over. But the long awaited drop in crude oil, and most likely commodities in general, is likely at hand. The chart of the S&P shows a couple of clearly defined pivots to watch, market by the green lines. The trend is down, but flattening. Momentum is down, but short term has kinked up from the oversold level. If the upper pivot is taken out, the trend could reverse to up. If that is the case, there will most likely be many retests to get on board. Most traders will doubt a trend reversal with such bad news being reported by the media every day. Some of the bad news is true, but much of it in my opinion is to make conditions look worse than they really are to help elect the media appointed messiah.
qqqq0729.pngThe chart to the left is of the Nasdaq/QQQQ. I point this out to show what a mess prices have been this last month. The longer term trend of the Nasdaq looks a bit more promising than that of the S&P. However, of the last few weeks there has been very choppy trade, with much rotation and backing and filling.

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